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TMI Blog2022 (4) TMI 1642X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that he had not formed any syndicate. We also do not find any merit in the assessee's ground to the effect that corresponding to the quantum of share of profit of the assessee in various syndicates, as determined by the AO, no corresponding asset or expenditure was found. We find that first of all, this assertion itself is factually incorrect and contrary to the assessee's own submissions before us in respect of other grounds of appeals through which it is stated that for explaining the sources of undisclosed investment/expenditure the assessee has claimed that the source is from the share of profit from the said syndicates. Even otherwise, not finding any corresponding asset/expenditure, ipso facto, cannot be a ground for presuming that the assessee had not derived undisclosed income, especially in a circumstance when such undisclosed income is evident from ample of documentary evidences found during the course of search. Decided against assessee. Undisclosed income from liquor trade business - We find that while computing the income of the assessee from such syndicates, the AO at para (14.11) of her Assessment Order has taken into consideration the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Act itself. AO besides making addition on account of assessee s having derived share of profit from various syndicates, has also made addition, to the extent of the assessee s share in such syndicate, qua some alleged inadmissible expenses incurred by such syndicates. We find full substance in the assessee's contention that since none of these inadmissible expenditure was claimed by the assessee himself, and therefore, any disallowance for claim of any such expenses can only be made in the hands of the syndicates which have actually incurred such expenditure. Additions on account of disallowances of expenses, the income of the syndicates ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant share of income of the assessee in the total income of the syndicates was required to be apportioned. Thus, any share of the assessee in the inadmissible expenses of the syndicates ought to have been taken as in the nature of share of profit and that was required to be added under section 67A of the Act, but again, after making such addition, the necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) in deleting the addition made by the AO on account of alleged investment in loans and advances by the assessee. Investment in loans and advances merely on the basis of seized documents which are in the form of diaries - HELD THAT:- Any seized document has to be interpreted in its entirety and a combined full effect of such document is required to be taken into consideration while making the assessment. In our view, making of loans and advances can be subjected to income of an assessee only if the sources of making such loans and advances remain unexplained. However, in the instant case, from the seized diaries and compilation made on the basis of such diaries by the Special Auditors, appointed u/s142(2A) of the Act, the sources of making of loans are becoming visible and the sources are such which can be regarded only as capital receipts in the hands of the assessee and by no stretch of imagination, such sources can be termed to be undisclosed income of the assessee. We find no infirmity in the action of the ld. CIT(A) deleting the additions. Investments in immovable properties - Addition made on the basis of jottings in seized diaries - HELD THAT:- From the compilation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in purchase of jewelleries - additions deleted by the ld. CIT(A) - HELD THAT:- Most vital fact which we noted from the seized document is that such estimate is bearing the date 21/01/2012 which falls during the financial year 2011-12 relevant to A.Y. 2012-13 and therefore, at any rate, in our considered opinion, it could not have been presumed that the assessee made any actual purchase against the jewelleries mentioned in such estimate during the financial year 2012-13 relevant to the assessment year 2013-14 under appeal. In nutshell, the ld. AO has made the subject addition in inappropriate assessment year i.e. in A.Y. 2013-14 instead of correct A.Y. 2012-13 and therefore, on this count alone, in our considered view, no addition was warranted in the assessee s income on account of unexplained expenditure in jewelleries - no infirmity in the action of the ld. CIT(A) in deleting the said addition. Resultantly, the Ground of the Revenue dismissed. Addition on the basis of seized/impounded documents - We are in agreement with the findings given by the ld. CIT(A) that as per the settled law, the initial onus lies upon the assessing officer that the assessee had made any investment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 10,00,000/- made by the AO in the assessee s income on account of unexplained investment in purchase of land at Lalitpur for A.Y. 2013-14. Undisclosed interest received from a partnership firm - We find that such partnership firm has not claimed payment of any interest on the outstanding balances of partners capital and thus, has not claimed any deduction u/s. 40(b) of the Act. We find merit in the contention of the assessee that as per the explicit proviso to clause (v) of section 28 of the Act, where any interest, salary, bonus, commission or remuneration which has not been allowed to the partnership firm u/s 40(b), the same shall not be subjected to tax in the hands of any partner, in their individual capacities. However, we find that in the present case, the AO, except relying upon the subject loose paper, could not bring any adverse material on record to establish receipt of interest income by the assessee from the partnership firm. It was further observed that even during the course of remand proceedings, the AO failed to controvert the evidences furnished by the assessee. Thus, we do not find any infirmity in the action of the ld. CIT(A) in deleting the subject addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cash balance of Rs. 14,46,530/- as per his regular cash book cannot be doubted. In such circumstances, the cash amount of Rs. 14,46,530/- cannot be regarded as the unexplained money of the assessee. Thus, we find no infirmity in the action of the ld. CIT(A) in deleting the addition of Rs. 14,46,530/- made by the AO in the assessee s income on account of unexplained cash found and seized. Unexplained or unaccounted investment in purchase of shares of ADPL - The addition having been made by the AO in a wrong year, is not sustainable in the eyes of the law. Accordingly, we are inclined to hold that during the previous year relevant to assessment year 2016-17, the assessee had not made any unexplained or unaccounted investment in purchase of shares of ADPL and therefore, no addition of any amount was warranted in the assessee s income for A.Y. 2016-17 on this count. Accordingly, in our considered view, the ld. CIT(A) was not justified in confirming addition even to the extent of Rs. 71,00,000/- in the income of the assessee for A.Y. 2016-17 out of the total addition of Rs. 3,05,00,000/- made by the AO on this count. Undisclosed income by way of commission from some Geda Ji against s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition has been made by way of discovering a new source of income by the assessee, without disturbing the results shown by the assessee in his regular books of account, there was absolutely no occasion for the AO to reject the regular books by invoking the provisions of s. 145(3). Undisclosed warehouse profit from Syndicate M/s. Mahakal Traders - We find absolutely no infirmity in the action of the ld. CIT(A) in confirming the addition amounting to Rs. 4,25,000/- made by the AO in the assessee s income for A.Y. 2010-11 on the basis of one document seized from the premises of the assessee himself. We find that in such document, the capital account of the assessee has been credited with some warehouse profit and in our considered view, such warehouse profit derived by the assessee is not exempted u/s. 86 of the Act. Unexplained payment of commission to achieve turnover - Upon overall consideration of the entire material placed on record, we do not find any infirmity in the action of the ld. CIT(A) in confirming the addition to the extent of Rs. 2,36,000/- in the income of the assessee for A.Y. 2010-11 on account of payment of commission for achieving turnover for some company. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.30,22,593/- made by the AO on account of undisclosed interest income. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.42,99,000/- made by the AO on account of undisclosed investment. 4. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.1,10,11,000/- made by the AO on account of unexplained investment. 5. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.2,35,00,000/- made by the AO on account of unexplained investment. 2.3 Grounds of appeal raised by the Revenue for AY 2012-13 in IT(SS)A No. 51/Ind/2021: 1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 6,26,53,801/- made by the AO on account of undisclosed income from liquor trading business. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,24,139/- made by the AO on account of undisclosed interest income. 3. On the fact and in the Circumstances of the case the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h payments. 2.6 Grounds of appeal raised by the Revenue for AY 2015-16 in IT(SS)A No.54/Ind/2021: 1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 7,75,08,425/- made by the AO on account of undisclosed income from liquor trading business. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 66,28,263/- made by the AO on account of unexplained income. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,70,76,800/- made by the AO on account of undisclosed investment. 4. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 51,00,000/- made by the AO on account of undisclosed expenditure. 5. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 2,14,72,474/- made by the AO on account of undisclosed investment. 6. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,27,53,066/- made by the AO on account of unexplained investment. 2.7 Grounds of appeal raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for giving direction of Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant s contention made before him that corresponding to the undisclosed income determined by the AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 7 That, the learned CIT(A) grossly erred, both on facts and in law, in making a finding that the appellant had formed some syndicate named and titled as M/s. Mahakal Traders, Dhar . 8a) That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.4,25,000/- made by the AO in the appellant s income on account of alleged undisclosed warehouse profit from some Syndicate named as M/s. Mahakal Traders merely on the basis of some loose papers, without considering and appreciating the explanation of the appellant. 8b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 5b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant s contention made before him that corresponding to the undisclosed income determined by the AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO s action of making allegation of appellant s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates only were referred to before making such proposal. 2c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for making proposal of referring the case of the appellant to Special Audit under s.142(2A) of the Act without considering and appreciating the material fact that the same sets of books of account of the appellant had also undergone scrutiny assessment under s.143(3) of the Act for the relevant assessment year and the then AO has passed the assessment order in the case of the appellant after verification of such books of account only. 3 That, without prejudice to the above, the learned CIT(A) grossly erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r business. 7b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the AO that the alleged syndicates had incurred inadmissible expenses. 8 That, the learned CIT(A) grossly erred, both on facts and in law, in making a finding that the appellant had formed some syndicate named and titled as M/s. Mahakal Traders, Dhar . 9a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in making an enhancement of Rs.35,10,000/- in the income of the appellant by invoking the provisions of s.251(2) of the Act on account of alleged unexplained investment in purchase of land at village Lalitpur. 9b) That, without prejudice to the above and without admitting any alleged unexplained investment in the subject land and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. 10 That, the appellant further craves leave to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in confirming the additions to the extent of Rs.90,000/- made by the AO in the appellant s income and as also, in making an enhancement of Rs.77,28,310/- in the appellant s income under s.251(2) of the Act thereby resulting into an addition of Rs.78,18,310/- in the appellant s returned income. 5 That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - was not made by the appellant but it was made by one company named and styled as M/s. Regent Beer and Wines Ltd. in which the appellant was one of the directors. 10a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in making an enhancement of Rs.77,28,310/- in the income of the appellant by invoking the provisions of s.251(2) of the Act on account of alleged unexplained investment in purchase of land at village Lalitpur. 10b) That, without prejudice to the above and without admitting any alleged unexplained investment in the subject land and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. 11 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary. 2.12 Grounds of appeal raised by the Assessee for AY 2014-15 in IT(SS)A No. 122/Ind/2020: 1a) That, on the facts and in the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in confirming the additions to the extent of Rs.1,19,000/- made by the AO in the appellant s income and as also, in making an enhancement of Rs.4,00,000/- in the appellant s income under s.251(2) of the Act thereby resulting into an addition of Rs.5,19,000/- in the appellant s returned income. 5 That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 6a) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from various so-called Syndicates without considering and appreciating the appellant s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant s contention made before him that corresponding to the undisclosed income determined by the AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 7a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO s action of making allegation of appellant s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 7b) That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant s income on account of alleged unexplained expenditure by the appellant in the marriage of his son. 9b) That, without prejudice to the above and without admitting any alleged unexplained marriage expenditure and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained expenditure against the alleged receipt of income by the appellant from various Syndicates. 10a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming an addition to the extent of Rs.7,83,674/- out of the total addition of Rs.2,22,56,148/- in the appellant s income on account of alleged undisclosed expenditure in purchase of jewellery without properly considering and appreciating the explanation made by the appellant to the effect that the alleged investment in the jewellery was never made by the appellant. 10b) That, without prejudice to the above and without admitting any alleged unexplained expenditure in subject jewellery and as also, without admitting any receipt of income by the appellant from any Syndicate, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in confirming the additions to the extent of Rs.1,07,00,813/- made by the AO in the appellant s income and as also, in makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout properly considering and appreciating the explanation of the appellant. 8b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.31,00,813/- made by the AO in the appellant s income without considering and appreciating the material fact that the appellant neither carried out any financial transaction with the so-called Ujjain Syndicate nor he made any investment therein. 8c) That, without prejudice to the above and without admitting any alleged unexplained investment in capital of Ujjain Syndicate and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. 9 That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.5,00,000/- made by the AO in the appellant s income on account of alleged unexplained expenditure in the nature of illegal gratification without properly considering and appreciating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the provisions of s.251(2) of the Act on account of alleged unexplained investment in purchase of land at village Lalitpur. 11b) That, without prejudice to the above and without admitting any alleged unexplained investment in the subject land and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. 12 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary. 3.1 Brief facts of the case as culled out from the records are that the assessee is an individual mainly deriving income from carrying out the business of sales of liquor. Besides, the assessee also derived income from his hotel business under a proprietary concern namely M/s. Hotel Ambrosia. Further, the assessee also derives income from certain partnership firms in which he is one of the partners. The assessee also derives salary and rental income. The assessee furnished his or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r at Rs.4,25,000/- in A.Y. 2010-11 (para 22); Unexplained payment of commission in M/s. Calcutta Developers Pvt. Ltd. at Rs.2,36,000/- in A.Y. 2010-11 (para 24); Undisclosed investment in loans and advances on the basis of jottings in diaries at Rs.47,40,000/- in A.Y. 2010-11, Rs.1,10,11,000/- in A.Y. 2011-12, Rs.1,12,03,000/- in A.Y. 2012-13, Rs.7,18,42,185/- in A.Y. 2013-14, Rs. 2,05,82,582/- in A.Y. 2014-15, Rs.3,27,53,066/- in A.Y. 2015-16 and Rs.75,19,000/- in A.Y. 2016-17 (para 26); Undisclosed investment in immovable properties on the basis of jottings in diaries at Rs.42,99,000/- in A.Y. 2011-12, Rs.30,07,050/- in A.Y. 2012-13, Rs.4,07,01,630/- in A.Y. 2013- 14, Rs.2,49,47,481/- in A.Y. 2014-15, Rs.1,70,76,800/- in A.Y. 2015-16 and Rs.44,00,000/- in A.Y. 2016- 17 (para 18); Undisclosed investment in immovable properties at Rs.2,35,00,000/- in A.Y. 2011-12 and Rs.10,00,000/- in A.Y. 2013-14 (para 28); Undisclosed expenditure on purchase of jewellery at Rs.31,500/- in A.Y. 2013-14 and Rs.2,22,56,148/- in A.Y. 2015-16 (para 21); Undisclosed interest from M/s. Jai Baba Construction at Rs.17,64,700/- in A.Y. 2014-15, Rs.66,28,363/- in A.Y. 2015-16 and Rs.17,28,790/- in A.Y. 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(b) of the Assessee for A.Ys. 2012-13, 2013-14, 2015-16 2016-17 7.1 Through the Ground No. 1 for A.Y. 2010-11 to A.Y. 2013-14 A.Y. 2015- 16 Ground No. 2 for A.Y. 2016-17, the revenue has challenged the action of the ld. CIT(A) in deleting the additions made by the AO in the assessee s income in the various assessment years, on account of undisclosed income from liquor trade business through Syndicates. Further, through the grounds of appeal for various assessment years, the assessee has challenged the action of the ld. CIT(A) in confirming the finding of the AO that the assessee was carrying out the business through formation of Syndicates. The assessee also agitated that the ld. CIT(A) did not appreciate that corresponding to the undisclosed income determined by the AO, no undisclosed asset or investment or expenditure was detected during the course of search and seizure operations u/s. 132 of the Act. 7.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee s group on 07.01.2016, various incriminating documents were seized from which it was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onation, personal expenses, breakage and leakages, etc. were not permissible. The AO also noted that some expenditure exceeding amount of Rs. 20,000/- were incurred by the syndicates in violation of the provisions of section of 40A(3)/(3A) of the Act. The AO also relied upon the findings of the special auditors given in their report. At the same time, the AO also found that the assessee had made investment in various syndicates the sources whereof were not satisfactorily explained by the assessee. After giving detailed findings, reproducing various seized data and drawing the syndicate wise details in tabular form, the AO made additions, for various assessment years under appeal, under three sub heads viz. (i) share of assessee in the undisclosed income from the syndicates; (ii) share of assessee in inadmissible expenditure incurred by the syndicates; and (iii) sum of undisclosed capital invested by the assessee in syndicates, by drawing various tables at para 14.10. Finally, after fairly giving set-off for the assessee s share in the losses incurred by the syndicates for various assessment years, the AO made the addition, for various assessment years, as per the table given at par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tally data and financial statements were found either from the appellant s own premises or from the premises of the associates of the appellant and such seized data clearly reveal that the appellant along with others had formed AOPs in the shape of syndicates and such syndicates had carried out businesses as independent entities and from such entities the appellant had derived substantial amount of income by way of his share in profit. Further, the seized tally data and other incriminating documents that all such syndicates had incurred substantial expense towards payment of gratification, charity, donation, commission, personal expenses etc. which are not legally deductible under the provisions of section 37(1) of the Act. The appellant further could not establish by any documentary evidence that the syndicates had made due compliance of provisions of TDS before making payment of rent. Further, the possibilities of violation of provisions of section 40A(3)/(3A) which prohibits cash payments exceeding Rs. 20,000/- cannot be overruled and the appellant miserably failed to prove by any positive evidence that there was no such violation. From the seized documents, it was observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the seized data and incriminating documents clearly reveal formation of such syndicates. Looking into totality of the facts, the appellant along with other persons had formed syndicates to carry out the business of liquor in which the appellant and other members were having certain share as agreed upon between themselves. Further, such syndicates had incurred certain expenses which were either prohibitory or inadmissible in the nature u/s. 37 of the Act or were not allowable for non compliance of the provisions of section 40(a)(ia) or section 40A(3)/(3A) of the Act. I also hold that the appellant had made undisclosed investment towards his capital contribution in the various syndicates and in various years. However, after giving the aforesaid findings, the ld. CIT(A) held that although, the assessee had undisputedly formed various syndicates/groups with various persons for carrying out the business of liquour, for a definite share of profit, but, in any case, the share of the assessee in the profit of these syndicates and as also, in the inadmissible expenses incurred by such syndicates cannot be added to the income of the assessee in view of the specific provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the tax treatment for both the additions in the hands of the appellant would remain the same. Thus, in my considered view, the appellant had derived undisclosed income in the form of share of profit from some syndicates, which are nothing but Association of Persons (AOP) or Body of Individuals (BOI) formed by the appellant along with various other persons for the purpose of carrying out the liquor business with a motive to earn profit from such business in an agreed ratio. In my view, under the provisions of section 2(31) of the Act which gives the definition of the expression Person , a person includes, an association of persons or a body of individuals, whether incorporated or not. The syndicates formed by the appellant along with others is a separate taxable legal entity and separately chargeable to tax u/s. 4 of the IT Act. Further, in my view, such syndicates (AOPs/BOIs) are chargeable to tax at the Maximum Marginal Rate (MMR). Thus, in the instant case, in my view, any assessment of income, on the basis of the seized incriminating material and data, ought to have been made in the hands of the respective syndicates, a separate taxable entity, either u/s. 153C of the Act or u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed investments, the appellant has raised separate grounds viz. ground nos. 8(c) 8(d) for A.Y. 2015-16, the issue relating to quantum of addition on these grounds of undisclosed investment has been adjudicated separately while dealing with such grounds. In the result, the ground nos. 8(a) 8(b) for A.Y. 2015-16 are Dismissed. 4.7.1 I have considered the facts of the case, the assessment order and the written as well as oral submissions of the appellant. On perusal of the seized tally data and other documents, it is amply evident that the appellant had formed syndicates with various persons, in various years and such syndicates had carried out liquor business for deriving profits to be shared by the appellant and other members of the syndicates in certain agreed ratio. The Special Auditors nominated under section 142(2A) of the Act have also given the same finding in their report. Further, the AO, at various places in the Order, has given clear findings that (i) the appellant had formed syndicates with various persons for carrying out the liquor business; (ii) from carrying out such businesses, the appellant had derived share of profit; (iii) such syndicates had incurred cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, it envisages those cases in which the shares of the members of AOP or BOI are determinate and known. In such cases, if income of any of the members of the AOP or BOI exceeds the maximum amount which is not chargeable to tax, in the case of that member, such AOP or BOI would be chargeable to tax at the maximum marginal rate and where income of any member or members is chargeable at a rate or rates higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the AOP or BOI which is relatable to the income of such member or members and for the balance income, the tax shall be charged at the maximum marginal rate. In other words, irrespective of the status of the AOP/ BOI, it is required to pay tax atleast at maximum marginal rate on its income. 4.7.2 I find a significant force in the contention of the appellant that if there existed any syndicates, then income earned by such syndicates from carrying out businesses would be required to be assessed in the hands of such syndicates and such income cannot directly be assessed to tax in the hands of its members forming the syndicates. The investigation wing duirng the course of sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 (Rs. Nil.) AY 2012-13 (Rs. 32,78,188/- 5 Shri Ramesh Chand Rai and manish Rai Others, AOP (Dhar Group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 AYs 2010-11 to 2014- 15 2016-17 (Rs. Nil.) AY 2015-16 (Rs. 2,03,89,740/- On perusal of these assessment orders, it is found that the concerned AO i.e. ACIT 2(1), Indore in the cases of AOP s has made additions on account of undisclosed business income from carrying out the liquor business have been assessed on the basis of various materials which were seized during the course of the search carried out in the case of Shivhare Group. Further, in these assessment orders, it has been held that these AOPs being the liquor syndicates, had carried out business of liquor in various years and as per the Special Auditors Report given under s.142(2A) of the Act in the case of Shivhare Group, these syndicates had earned profit and had also incurred some expenses which were liable for disallowance. The amount of profits/ inadmissible expenses, considered by the AO framing the separate assessments of the syndicates, were the same as were considered while making the assessment in the hands of the appellant. In view of the findings of the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the provisions of, this Act in respect of the total income of the previous year of every individual, HUF, company and local authority, and of every firm and other AOP or the partners of the firm or the members of the association individually. (Emphasis, italicised in print, supplied) The expression person was defined in cl. (9) of s. 2 in the following words : 9. `Person' includes an HUF and a local authority . As against the above provisions, s. 4 of the Present Act [before it was amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989] read thus : 4(1). Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-s. (1), income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed in the hands of B, A may be legitimately aggrieved but that does not mean that B is exonerated of his liability on that account. B cannot say, when he is sought to be taxed in respect of the total income which is lawfully taxable in his hands, that since the ITO has taxed very same income in the hands of A, he himself cannot be taxed with respect to the said total income. This is not only logical but is consistent with the provisions of the Act. In this connection, it may be pointed out that where the Parliament wanted to provide an option, a discretion, to the ITO, it has provided so expressly. Sec. 183 [which has since been omitted w.e.f. 1st April, 1993 by the Finance Act, 1992] provided that in the case of an unregistered firm, it is open to the ITO to treat it, and make an assessment on it, as if it were a registered firm, if such a course was more beneficial to Revenue in the sense that such a course would fetch more tax to the public exchequer. Sec. 183 read as follows : 183. Assessment of unregistered firms. In the case of an unregistered firm, the Assessing Officer (a) may determine the tax payable by the firm itself on the basis of the total income of the firm, or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person'. It seems desirable to have a comprehensive definition of the word `person' in the Act so as to cover all entities mentioned in (i) the existing definition [s. 2(9)]. (ii) the existing charging provisions [ss. 3 and 4], and (iii) the General Clauses Act. The definition has therefore been amplified on the above lines. The Parliament, however, chose not to accept the suggested definition in toto; it deleted the words indicating the option. The Committee, which drafted the draft Bill comprised Sri P. Satyanarayana Rao, Sri G.N. Joshi and Sri N.A. Palkhivala, who was specifically appointed as a member for the purpose of the revision of the IT Act. [Extracts are taken from the XIIth Report of the Law Commission of India, published by Govt. of India, Ministry of Law.] 7. This question has also been troubling the High Courts in the country. As a matter of fact, Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawalla vs. ITO 1975 CTR (Pat) 33 : (1976) 103 ITR 688 (Pat), Punjab and Haryana High Court in Rodamal Lalchand vs. CIT (1977) 109 ITR 7 (P H), Andhra Pradesh High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961, which provide that income tax shall not be payable by an assessee in respect of his share in the income of the association of persons or body of individuals. 4.7.4 The AO while making the addition in the hands of the appellant, has worked out the appellant s share in each of the syndicates under consideration. It is thus evident that the syndicates formed as AOP or BOI are such in which the shares of their members are determinate and known. In such circumstances, the share of the appellant, being a member of such AOP/ BOI, would be required to be computed in accordance with the provisions of section 67A of the Act. However, in view of the specific provisions of clause (a) of the proviso to section 86 of the Act, where the Association of Persons or Body of Individuals is chargeable to tax on its total income at the maximum marginal rate or at any higher rate under any of the provisions of Act, the share of a member in the income of such AOP/BOI as computed under section 67A shall not be included in the total income of such member. In my view, in the instant case, all the conditions for invoking the clause (a) to section 86 of the Act are getting explicitly ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious documents and datas seized during the course of search from the appellant and other persons, after passing the impugned order, the Revenue has also separately assessed some syndicates, in the status of AOP, under s.144/153C r.w.s. 153A of the Act. I also find that while framing the assessments in the case of such syndicates, the income of the syndicates as worked out by the Special Auditors have duly been incorporated and have been subjected to maximum marginal rate of tax. Such fact fortifies the claim of the appellant that any income of the syndicates were liable to be assessed separately in the hands of the respective syndicates only, in the status of AOP/ BOI, at the maximum marginal rate and the appellant s share in the profit of such syndicates cannot be added to the individual income of the appellant in view of the specific provisions of section 86 read with section 67A of the Act. Accordingly, in view of the findings given above, the additions made by the AO amounting to Rs. 69,98,079/- in AY 2010-11, Rs. 2,31,19,457/- in AY 2011-12, Rs. 6,26,53,801/- in AY 2012-13, Rs. 5,89,58,701/- in AY 2013-14, Rs. 7,75,08,425/- in AY 2015-16 and Rs. 1,32,43,450/- in AY 2016-17 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had made undisclosed investment and had also derived share in profit earned by such syndicates. It was further averted that the syndicates had incurred certain expenses which were not admissible in accordance with the law. After making such allegations, the appellant was show caused as to why an amount of Rs.69,98,079/- be not treated as his undisclosed income in respect of his share of profit in the syndicates, share in inadmissible expenses of syndicates and undisclosed capital investment in the syndicates, for the previous year under consideration. 1.01 In response to such show cause notice, the appellant strongly objected to have formed any syndicate or AOP with any person for carrying out the liquor business. The appellant submitted that he was carrying out the liquor business in his individual capacity only and profit derived from such business was duly shown in his return of income under the head Profits and gains from business or profession . The appellant completely denied to have derived any share of profit from any syndicate and as also making of investment in any syndicate. A copy of the reply dated 03-08-2018 furnished by the appellant before the learned AO is placed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of highest local Excise duty, during the period of license, for any particular shop. For such purpose, the State Excise Authorities, by paper publications and gazette notifications, invites tenders from the interested bidders who wish to obtain right to sell liquor from any particular shop, commonly known as liquor license. The person bidding is commonly known as Liquor Contractor. Before participating in the bid, the liquor contractor is required to deposit a certain percentage of the license value for which he intends to bid. After bidding, the liquor contract for any liquor shop, in any specified area, is awarded to the highest bidder. Thus, the highest bidder for any shop, gets the license for one year to sell the liquor, in retail, subject to his agreeing to pay a minimum amount by way of duty for which he had made the bid. After bidding, the successful liquor contractor has to furnish bank guarantee of the stipulated amount in favour of the Excise Authorities. After getting the license, the liquor contractor has to identify any shop in the specified area at his own. After opening the shop, the contractor is required to procure the material (liquor), from the district war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsolidated entries in respect of purchases, payment of duties, deposits in bank accounts and expenses etc. are made by the liquor contractor in the regular cash book maintained by him on day to day basis. From such cash book, in the computerized system, entries automatically get posted to concerning accounts. At the end of every financial year, the books of accounts are finalized on the basis of trial balance extracted and thereafter Financial Statements are drawn. It is submitted that the appellant was also regularly maintaining such accounts and maintenance of such accounts was also verified by the search party. During the course of search under s. 132 in appellant s premises, the search party had also found these regular accounts maintained in his computer system and soft copies of all such accounts were also taken by them and such soft copies were placed on record of the assessing officer. 4.05 That after drawing the financial statements from year to year, the appellant used to get his books of accounts, regularly maintained in the ordinary course of business, duly audited from some qualified Chartered Accountants and also used to get Audit Reports, in the prescribed form no. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly from the State Government, through its State Excise Department, after making payment of duties and cost of materials. The State Excise Authorities, while receiving the payment, are compulsorily required to collect tax at source in accordance with the provisions of section 206C of the Income Tax Act, 1961. It was further submitted that in the appellant s case, no variation of even a single penny had arisen between the purchases and TCS thereon shown by the appellant in his regular books of accounts and that shown by the State Excise Authorities in their annual returns submitted before the Income Tax Authorities in respect of TCS made by them. Thus, in other words, purchases and payment of duties shown by the appellant in his Audited Financial Statements were fully verifiable and in such circumstances, there could not have been any slightest doubt as regard to suppression of any purchases in his Audited Books of accounts. 5.03 It was also submitted before the learned AO that, in response to the returns of income furnished by the appellant under s. 139(1) of the Act, in respect of three of the assessment years, i.e. for A.Y.2010-11, A.Y.2011-12 and A.Y. 2012-13, assessments were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red interest is also factually incorrect. The fact remained that the appellant had not formed any syndicate/ group either for the purpose of carrying out liquor business jointly or for the purpose of deriving any income there from and therefore, the question of his earning any income from any syndicate/ group, in any of the assessment years under consideration, does not arise at all. 6.03 That, the third averment made in the impugned assessment order that the existence of syndicate was also accepted by the key members of the group, it is submitted that first of all, there is no alleged group as such of the various persons, as referred to by the learned AO at para (14.2) of the impugned assessment order. It is submitted that Shri R.S. Shivhare, Shri L.N. Shivhare and Shri Ashish Shivhare, whose names have been mentioned in the above referred para, are not family members of the appellant. It is submitted that the appellant was carrying out his liquor business independently and the above named persons were not in any manner associated with the retail liquor trading business of the appellant. It is further submitted that during the course of the assessment proceedings, despite making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prices remain static. It was not for the Tribunal to have guess work as to for what purposes the Appellant wanted to cross-examine those dealers and what extraction the Appellant wanted from them. 6. As mentioned above, the Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fforded a reasonable opportunity to defend himself against the charges, on the basis of which an inquiry is held. The government servant should be given an opportunity to deny his guilt and establish his innocence. He can do so only when he is told what the charges against him are. He can therefore, do so by crossexamining the witnesses produced against him. The object of supplying statements is that, the government servant will be able to refer to the previous statements of the witnesses proposed to be examined against him. Unless the said statements are provided to the government servant, he will not be able to conduct an effective and useful cross examination. 29. In Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100, this Court held: 30. The aforesaid discussion makes it evident that, not only should the opportunity of cross-examination be made available, but it should be one of effective cross examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error is committed by the Tribunal in deleting the said amount. This issue, therefore, requires no further consideration. 6.05.5 The Hon ble Gujarat High Court, again, in the case of the CIT vs. Supertech Diamond Tools Pvt. Ltd. 2013 (12) TMI 1529 (Guj.) has held as under: The reference to the statements made by some of the persons related with the said investing companies is of no effect because such statements could not have been utilized against the appellant Company when the appellant company had not been afforded an opportunity of confronting and cross-examining the persons concerned. There does not appear anything occurring in the statements of the persons relating with the appellant Company so as to provide a basis for the findings recorded by the AO. [Emphasis supplied] 6.06 Your Honour, as regard to the statement of Shri R.S. Shivhare, recorded under s. 132 on 08-03-2016, it is submitted that in reply to question no. 2, Shri R. S. Shivhare, had stated that the liquor business is carried out by each of the persons, individually, i.e. in his personal capacity by maintaining their accounts individually. It was also stated by him that no formal or in the legal form, any syndi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument belongs to the person from whose possession it is found. It will be appreciated that none of the tally accounts/ other evidences, relied upon by the learned AO, were found either in possession or control of the appellant. Undisputedly, all these materials were allegedly found in possession of a third person. Accordingly, it was incumbent upon the assessing officer to first seek the explanation of the concerning person on the seized materials and then only, the appellant could have been asked to tender his explanation on the said material and that too, after apprising the appellant about the explanation of the person from whose possession such material was found and as also after giving due opportunity of cross examination of such person to the appellant. However, in the instant case, unfortunately, the learned AO has not undertaken all these exercise and instead, directly ventured to seek the appellant s explanation on such material. As the appellant was not the author/ creater of these materials, he was unable to make his explanation on each and every paper . 7.02.1 During the course of the assessment proceedings, the appellant had clearly expressed his apprehension that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It shall be appreciated that whenever any syndicate or AOP or partnership is formed, some documents are necessarily prepared between the members of such syndicate or AOP or partnership for determining the purpose, sharing ratio, capital contribution etc. of the members. However, in the instant case not even a single document of formation of any syndicate or group was found from any of the premises. It is submitted that allegation of formation of syndicate is mere assumption and not a reality. 7.03.1Your Honour, in the instant case, the learned AO has not conducted any independent enquiry that whether or not the appellant was running any liquor business by forming any syndicate. The learned AO could have deputed his officios for conducting enquiries at the places where the appellant had claimed to have run liquor shops in his individual capacity in the past. From the enquiries, it could have been gathered that whether it was appellant only or some other persons too, who were running the shops, in the capacity of owner. The learned AO could have also made necessary enquiry from the employees and as also from the landlords of the shops, from which the appellant was running his liquor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicates. A copy of the relevant summary of share income of the appellant from various liquor businesses during the period from 01-04-2009 to 31-03-2016, as prepared by the Special Auditors, is being submitted herewith for kind perusal and record of Your Honour, as Annexure A-13.00 [PB Page No.319 to 321]. 10.00 Your Honour, based upon the table given by the then learned AO in his show cause notice and the Special Auditors Report, we have prepared a master statement showing syndicate-wise addition made by the learned AO, under the different heads, for the relevant assessment year. A copy of such master statement is being submitted herewith for kind perusal and ready reference of Your Honour, as Annexure A-14.00 [PB Page no. 322]. 10.01 Your Honour, on a perusal of the master statement, it shall be observed by Your Honour that none of the incriminating documents, on the basis of which, additions of Rs.69,98,079/- have been made in the appellant s income were found or seized from the appellant s premises. It shall be observed by Your Honour that most of the documents were found from the premises of third parties and therefore, the presumption under section 292C was not available to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were not admissible as deduction from the net profit of the syndicates, in accordance with provisions of the Income-Tax Act, 1961. 2.02 That, the working of the alleged undisclosed investments, alleged share of profit of the appellant in the syndicates and alleged share of the appellant in the inadmissible expenses incurred by such syndicates have been given, by way of a table, at para (14.7) of the subject assessment order. After considering the appellant s submission on the issues, the final addition on this count has been determined at paras (14.10) (14.11) of the subject assessment order. 2.03 That, in the last table at page no. 51 of the order, the details of the additions have been given wherein it has explicitly been stated that what is being added is the appellant s share in the profit of syndicates and as also share of profit in inadmissible expenses. Thus, undisputedly, both the items have been regarded as the share of profit of the appellant from syndicates. 2.04 That, as per findings given in the subject assessment order itself, the appellant had formed various syndicates/ groups with various persons for carrying out the business of liquor and in such syndicates/ g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit or net loss) shall be computed as follows, namely :- (a) Any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body; (b) Where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member's share in the income of the association or body; (c) Where the amount apportioned to a member under clause (a) is a loss, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the member's share in the income of the association or body. (2) The share of a member in the income or loss of the association or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputed in accordance with the methodology provided in section 67A. However, after making the computation of share of a member in AOP or BOI, in view of the specific provisions of section 86, such share of income shall be excluded from the total income of the assessee. There are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body. 2.08 Your Honour, the necessary provisions, as regard to charging of tax on the total income of an association or body at the maximum marginal rate are contained in section 167B of the Act. For a ready reference, the relevant provisions of section 167B are reproduced, as under: CHAPTER XV LIABILITY IN SPECIAL CASES FIRMS, AOPs, BOIs Charge of tax where shares of members in association of persons or body of individuals unknown, etc. (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co- operative society or a society registered under the Societi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged syndicates, of which the appellant is allegedly claimed to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of sub-section (2) to section 167B of the Act. 2.10 Your Honour, it is thus evident that the subject syndicates being liable for charge of tax at the maximum marginal rate, the first exclusion as contemplated in clause (b) read with clause (a) of proviso to section 86 of the Act would have no application. As regard the second proviso to section 86, it is submitted that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and therefore, the exclusion provision from operation of section 86 would not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it would be observed that the alleged share of profit of the appellant in various syndicates, which in the eyes of the law are nothing but Association of Persons, would be completely entitled for exclusion of total income. However, in the instant case, the learned AO, in complete derogation of the scheme of law, has not taken such aspect into consideration and made the impugned ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ps, now there would be no room and justification for sustaining the impugned addition in the hands of the appellant too. It is a well known maxim of the tax laws that the same income cannot be taxed twice in the hands of two different persons. 4.01 Your Honour, even if it is presumed that in the case of syndicates, the Department failed to make any assessment, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the appellant. It is submitted that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available to an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is duty bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. 4.02 Your Honour, in the similar circumstances, the Hon ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) was pleased t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act [before it was amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989] read thus : 4(1). Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-s. (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. (The amendments made by the aforesaid Amendment Act of 1987 do not make any difference so far as the present controversy is concerned.) The expression person is defined in cl. (31) of s. 2 in the following words : `Person' includes (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm, (v) an AOP or a BOI, whether incorporated or not, (vi) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be pointed out that where the Parliament wanted to provide an option, a discretion, to the ITO, it has provided so expressly. Sec. 183 [which has since been omitted w.e.f. 1st April, 1993 by the Finance Act, 1992] provided that in the case of an unregistered firm, it is open to the ITO to treat it, and make an assessment on it, as if it were a registered firm, if such a course was more beneficial to Revenue in the sense that such a course would fetch more tax to the public exchequer. Sec. 183 read as follows : 183. Assessment of unregistered firms. In the case of an unregistered firm, the Assessing Officer (a) may determine the tax payable by the firm itself on the basis of the total income of the firm, or (b) if, in his opinion, the aggregate amount of the tax payable by the firm if it were assessed as a registered firm and the tax payable by the partners individually if the firm were so assessed would be greater than the aggregate amount of the tax payable by the firm under cl. (a) and the tax which would be payable by the partners individually, may proceed to make the assessment under sub-s. (1) of s. 182 as if the firm were a registered firm; and, where the procedure specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afted the draft Bill comprised Sri P. Satyanarayana Rao, Sri G.N. Joshi and Sri N.A. Palkhivala, who was specifically appointed as a member for the purpose of the revision of the IT Act. [Extracts are taken from the XIIth Report of the Law Commission of India, published by Govt. of India, Ministry of Law.] 7. This question has also been troubling the High Courts in the country. As a matter of fact, Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawalla vs. ITO 1975 CTR (Pat) 33 : (1976) 103 ITR 688 (Pat), Punjab and Haryana High Court in Rodamal Lalchand vs. CIT (1977) 109 ITR 7 (P H), Andhra Pradesh High Court in Choudry (supra) and Delhi High Court in Punjab Cloth Stores vs. CIT 1978 CTR (Del) 257 : (1980) 121 ITR 604 (Del) have taken the view which we have taken. On the other hand, Madras High Court in CIT vs. Blue Mountain Engg.Corpn. 1978 CTR (Mad) 142 : (1978) 112 ITR 839 (Mad) and Patna High Court in its earlier decision in CIT vs. Pure Nichitpur Colliery Co. 1975 CTR (Pat) 83 : (1975) 101 ITR 79 (Pat) have taken the opposite view. The Andhra Pradesh High Court first expressed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00 [PB Page no. 344 to 366] 4.05 Reliance is also placed on the judgment of Hon ble ITAT Bangalore Bench, in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716. A copy of the said judgment is being submitted herewith for kind perusal and record of Your Honour, as Annexure A-19.00 [PB Page no. 367 376] 4.06 Reliance is also placed on the following judicial pronouncements: i) CIT vs. Virendra Kumar Gupta (2013) 87 CCH 0010 (Del) ii) CIT vs. Murugesa Naicker Mansion (2000) 244 ITR 0461 (Chen) 5.00 In view of the above facts and circumstances, it is submitted that the learned AO was not justified in making additions of Rs.69,98,079/- in the total income of the appellant on the allegation of appellant s having derived share of profit from various syndicates. Accordingly, the same deserve to be deleted on this count too. 8.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. 8.2 First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Accordingly, the Ground Nos. 6(a) 6(b) of the Assessee for A.Ys. 2010-11 2014-15; Ground Nos. 5(a), 5(b), 6(a) 6(b) of the Assessee for A.Ys. 2011-12, Ground Nos. 6(a), 6(b), 7(a) 7(b) of the Assessee for A.Ys. 2012-13, 2013-14, 2015-16 2016-17 have no merit and are thus dismissed. 8.3 Now, coming to the Revenue's Ground, through which they have agitated the action of the ld. CIT(A) in deleting the additions, for various assessment years, made by the AO in the assessee's income on account of undisclosed income from liquor trade business. Upon overall consideration, we find that undisputedly, the assessee had formed various Association of Persons (AOP), in form of syndicates/cartels/groups, with various other persons to carry out the business of liquor trade which is evident from the seized material/data and as also, report given by the Special Auditors. We find ourselves in agreement with the findings given by the AO that the assessee was having specified percentage of share of profit in all such syndicates. We find that the AO at para (14.7), by way of drawing a table, has given the details of various syndicates and the assessee's share in such syndicates. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excluded from the total income of the assessee. We find that there are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body, but, for the reasons discussed hereinbelow, none of the exceptions to section 86 are applicable in the present case. 8.3.3 We further find that in the instant case, as per the findings given by the AO himself, the share of the assessee as a member of the syndicates (AOPs) was determinate and therefore, the assessee s case would not fall under the provisions of sub-section (1) to section 167B of the Act. On the other hand, the case of the assessee would fall under the provisions of sub-section (2) to section 167B of the Act. In such a situation, the entire income of the syndicates, of which the assessee was found to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of subsection (2) to section 167B of the Act in the hands of such syndicates only. 8.3.4 We find that since all the subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can only be made in the hands of the syndicates which have actually incurred such expenditure. In our view, after making such additions on account of disallowances of expenses, the income of the syndicates ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant share of income of the assessee in the total income of the syndicates was required to be apportioned. Thus, any share of the assessee in the inadmissible expenses of the syndicates ought to have been taken as in the nature of share of profit and that was required to be added under section 67A of the Act, but again, after making such addition, the necessary relief in accordance with the provisions of section 86 ought to have been granted by the AO to the assessee which has not been so done in the instant case. 8.3.7 In our view, even if for any reason the Revenue failed to make any assessment in the hands of the syndicates, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the assessee. We find that unlike under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital in M/s. Mahakal Traders. 9.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee, some loose papers in the form of capital account of the assessee in the books of M/s. Mahakal Traders, were seized and inventorized as LPS-3, BS-1, Page No. 12 BS-2 Page No. 23 in IDS-04. The AO, from the subject loose papers, noted that the assessee had made capital investment in the group and on such capital, the assessee had derived interest income to the tune of Rs.78,46,167/- in four different assessment years. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation on the subject loose papers but the assessee instead of making any submission sought further time to submit his response. From the seized documents, the AO came to the conclusion that the documents seized were incriminating in the nature and the same were also verified by the Special Auditors. The AO further found that some of the transactions mentioned in these documents were through bank account and therefore, the genuineness of the ledger acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-11, Rs.30,22,593/- in A.Y. 2011-12, Rs.1,24,139/- in A.Y. 2012-13 and Rs.61,803/- in A.Y. 2013-14 made by the AO on account of interest received by the appellant in his capital investment in Syndicate are Deleted. Therefore, appeal on these ground is Allowed. 9.4 Aggrieved with the additions deleted by the ld. CIT(A), the revenue is in appeal before us. 9.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 9.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand notes before this Bench. 10.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We find that the seized document inventorized are in the form of ledger account of the assessee in the books of some M/s. Mahakal Traders, Dhar, Indore for the period from 01/04/2009 to 31/03/2010 and 01/04/2010 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,24,139/- in A.Y. 2012- 13 and Rs. 61,803/- in A.Y. 2013-14 made by the AO on this count. Accordingly, the common Ground No. 2 of the Revenue for A.Y. 2010-11, A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14 are hereby dismissed. 11. Ground No. 3 of the Revenue for A.Ys. 2010-11 2014-15; Ground No. 4 of the Revenue for A.Ys. 2011-12 2012-13; Ground No. 5 of the Revenue for A.Y. 2013-14; Ground No. 6 of the Revenue for A.Y. 2015-16; Ground No. 7 of the Revenue for A.Y. 2016-17 11.1 Through these Grounds for the captioned assessment years, the revenue has challenged the action of the ld. CIT(A) in deleting the additions made by the AO on account of undisclosed investment in loans and advances on the basis of jottings in seized diaries. 11.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the various premises of the assessee, some documents inventorized as BS-1 2, B-1 to 11, BK-1 to 3 and BK-1 2, were found and seized. Such documents were in the form of diaries. The AO noted that in the diaries, assessee s day to day transactions were entered. The AO further found that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the Remand Report submitted by the AO and the rejoinder of the appellant on such remand report. After considering all, my findings on various additions made for various assessment years are as under: Assessment Year 2010-11 : Rs.47,40,000/-:- The impugned addition of Rs.47,40,000/- has been made by the AO on the basis of one loose paper in the form of some ledger account of the appellant in the books of some ABC Ltd. which was found and seized from the premises of M/s. Regent Beer and Wines Ltd. Before me, the appellant has submitted that he had not given any sum of Rs.47,40,000/- to the ABC Ltd. but infact, he had received the cash of Rs.47,40,000/- from ABC Ltd. It was submitted by the appellant that the books of ABC Ltd. were considered to be that of M/s. Regent Beer and Wines Ltd. (in which the appellant was one of the directors) while making the assessment in the case of such company. The appellant further submitted that he had received the funds of Rs.47,40,000/- on different occasions, from the cashier of the company, only as an imprest and for safe custody of cash of the company. The sources of the cash received by the appellant from the company were cash withdrawals f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Asset), which have been extracted from the tally accounts prepared by the Special Auditors from the various seized material. The AO has made such annexures as the sole basis for making additions in the income of the appellant for various years. As the very basis for making the addition by the AO was the abstract from tally accounts prepared by the Special Auditors, a reference was necessarily required to be made to the Report of the Special Auditors on such abstract. Upon going through the Report of the Special Auditors, it was found that in such Report, the Special Auditors have furnished the particulars of the appellant for the various years in the prescribed Form No. 6B and along with such particulars, Schedules have been enclosed. In the Schedules, I could not find any adverse comment of the auditors on the summary of loans and advances as referred to hereinabove. However, under the head Other Observations forming part of Schedule-I to the main audit report in Form No. 6B, the Special Auditors have reported that on verification of incriminating seized diaries, they found recording of the day to day transactions of the appellant. However, without making any adverse comment, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich became the very basis for the impugned additions, are presumed to be correct, then also there being no allegation of any undisclosed income or undisclosed capital of the appellant, no addition could have been made. From the compilation of the personal diaries, it transpires that in such diaries, the very sources of making loans and advances have been shown to be out of unsecured loans taken by the appellant from various persons as per the details compiled by the Special Auditors in Annexure-1 of Sub-schedule 5. In my considered view, any seized document has to be interpreted in its entirety and a combined effect of such document is required to be taken into consideration while making the assessment. In my view, making of loans and advances can be subjected to income of an assessee only if the sources of making such loans and advances remain unexplained. However, in the instant case, from the seized diaries and compilation made on the basis of such diaries by the Special Auditors, appointed under s.142(2A) of the Act, the sources of making of loans are becoming visible and the sources are such which can be regarded only as capital receipts in the hands of the appellant and by no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all the jottings made in the diaries were made by the accountant on the direction of the appellant only, the appellant could not be fastened with the liability to explain the nature of each and every jottings made in such personal diaries. I find that the appellant has rightly placed reliance on the decision of the Hon ble Delhi High Court in the case of CIT vs. S.M. Aggarwal (2007) 293 ITR 0043 (Del.) in which the Hon ble Court has categorically held that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. I also found that the appellant could be able to demonstrate that the accountant who authored the diaries passed away during the period between the date of the search and the date of the assessments. Further, the jottings made in the diaries, the appellant could also be able to prove that the deceased accountant was also looking after the accounting affairs of other persons and entities other than the appellant. The author of the diaries Late Mr. Navdeep Shrivastava, in his statement given u/s. 133A of the Act on 07.01.2016, has nowhere stated that all the jottings made in his personal diaries pertained only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make an assessment. In my view, solely on the basis of jottings made in some personal diaries maintained by the part-time accountant of the appellant in his own handwriting, who is no more and whose statements on the various jottings made in the diaries could not be extracted fully, no adverse inference ought to have been drawn against the appellant. This is more so in a case where the appellant could be able to establish that in the said diaries, the jottings relating to some other entities were also made. In my view, the appellant could not be expected to explain the various jottings made in the personal diaries maintained by his part-time accountant who was also looking after the financial affairs of other entities. It is settled law that merely on the basis of notings made in the diaries, found from the possession of some third person, without having any other corroborative evidence and without making any enquiry, no addition can be made. Hon ble Supreme Court in the case of Central Bureau of Investigation v. V.C. Shukla and Others (1998) 3 SCC 410 and again in the case of Common Cause (A Registered Society) v. Union of India reported in (2017) 30 ITJ 197 (SC) has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n raising the query, it was contended by the counsel of the assessee that the seized documents were not in the nature of ledger accounts but, the Special Auditors submitting their Report u/s. 142(2A) of the Act, on the basis of the jottings made in the seized diaries had prepared the books of account of the assessee on Tally accounting system and from such Tally accounting system, the ledger accounts and the details of loans and advances, as annexed by the AO as Annexure E-48 were prepared. Such contention of the assessee was not rebutted by the CIT(DR). Even we also find that the ld. AO herself has stated at para (26.0) that the transactions noted in the diaries were compiled and further, from at para (26.3), it has been stated that such transactions were also noted by the Special Auditors. We find that the addition for A.Y. 2010-11 has been made by the AO on the basis of some other book titled as ABC Book whereas, additions for all other assessment years have been made by the AO on the basis of the seized documents referred to at para (26) of the assessment order. 12.2 Now, first coming to the addition made by the AO on the basis of some ABC Book , we find that for such year, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the same AO in the simultaneous assessment proceedings for A.Y. 2010-11 carried out in the case of M/s. Regent Beers and Wines Ltd. and therefore, there was absolutely no justification for the ld. AO to hold that such transactions were carried out by the assessee in his individual capacity. Thus, for A.Y. 2010-11, we do not find any infirmity in the Order of the ld. CIT(A) in deleting the addition of Rs. 47,40,000/- made by the AO on account of alleged investment in loans and advances by the assessee. Accordingly, the Ground No. 3 of the Revenue for A.Y. 2010-11 is hereby Dismissed. 12.3 Now, coming to the additions made by the AO for A.Y. 2011-12 to A.Y. 2016-17, in the assessee s income on the allegation of his investment in loans and advances merely on the basis of seized documents which are in the form of diaries. 12.4 We find that for making the subject additions, the AO has made reliance merely on some personal diaries which were found in the possession of one of the part-time accountants of the assessee namely Late.Mr. Navdeep Shrivastava, during the course of the survey carried out u/s. 133A in one of the premises of the asssessee. We find that during the course of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 We find that neither during the course of the investigation nor at any time thereafter, the full contents of the diaries were confronted to the author of such diaries. We are of the considered view that as per the settled law, without having any corroborative evidence, merely on the basis of jottings in some diaries, no adverse presumption can be made against any assessee. In the present facts and circumstances, there could have been some suspicion that the various jottings made in the personal diaries of the deceased accountant pertained to the assessee but, there is no other corroborative evidence in support of such suspicion. The Hon ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 0775 (SC) has held that there must be something more than mere suspicion to make an assessment. In our view, solely on the basis of jottings made in some personal diaries maintained by the part-time accountant of the assessee in his own handwriting, who is no more and whose statements on the various jottings made in the diaries could not be extracted fully, no adverse inference ought to have been drawn against the assessee. This is more so in a case where the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various assessment years on the basis of jottings made in the seized diaries, the assessee has furnished the complete details in the form a statement in his Paper Books, separately filed for each of the assessment years, and in such statement the assessee has furnished the full details such as S. No., Name of the Person to whom the jotting relates, Date of the jotting, amount of the jotting, relevant seized LPS/BS No., Assessee s Explanation, Reference of the documentary evidences furnished in support of the explanation etc. 12.8 We find that in the instant case, the AO has made additions on the allegation that the assessee had given cash loans to numerous persons in various years but not even in one single case, the AO has brought on record outcome of any independent enquiry, if any, made from any of the persons to whom it was alleged that the assessee had given any loan or advance. During the course of search in various premises of the assessee, no evidence as regard to making of any loan by the assessee or earning of any interest thereon was found. In our view, had any loan or advance, as alleged, was given by the assessee, then, some evidence in the form of some promissory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmations given by third parties, copies of undertakings etc. We find that the explanation given by the assessee through such statements and as also, documentary evidences filed in support thereof, have not been rebutted by the ld. CIT(DR). Thus, even on merits of the case, we find no infirmity in the action of the ld. CIT(A) in deleting the additions for A.Y. 2011-12 to A.Y. 2016-17 made by the AO on account of assessee s unexplained investment in giving loans and advances. 12.10 We also find merit in the alternate plea of the counsel of the assessee that even if for the sake of presumption, it is presumed that the seized diaries and other documents solely pertain to the assessee only and contain the unrecorded transactions of loans and advances given by the assessee, then also, in view of the peculiar circumstances of the case, no addition was warranted in the hands of the assessee. We find that the AO while making the addition for various assessment years, has given the details of loans and advances separately for each of the financial years, in an Annexure E-48 as referred to hereinabove. These annexures are basically in the form of Group Summary of Loans and Advances (Asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/04/2009 to 31/03/2016, the inflow of the funds in the hands of the assessee have been shown mainly coming out of the unsecured loans aggregating to a sum of Rs.75,33,47,900/- alleged to have been taken by the assessee from various persons as per the details given in the Annexure-1 to such Sub-schedule 5, a copy whereof is placed at page no. 254 of the assessee s Paper Book for A.Y. 2011-12. Further, from the Sub-Schedule 5 (PB 253), a sum of Rs.6,48,80,000/- has been shown as inflow out of refund of the loans given earlier. We further note from the said Sub-Schedule 5 that for the period from 01/04/2009 to 31/03/2016, for making various investments by way of loans, fixed assets etc., only an income of Rs.10,53,407/- has been shown as the source of inflow of funds. We find that in the above referred Annexure-1 to Sub-Schedule 5 of unsecured loans, the Special Auditors have furnished name-wise details of unsecured loans allegedly taken by the assessee from the various persons for an aggregate sum of Rs.75,33,47,900/-. In the background of these facts, we find merit in the contention of the assessee that even if the working of the Special Auditors, which became the very basis for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the various premises of the assessee, some documents inventorized as BS-1 2, BK-1 3, BK-1 2 and Q-8, were found and seized and further, during the course of the survey proceedings in the premises of M/s. Hotel Ambrosiya, certain documents inventorized as B-1 to 11 were found and impounded. Such documents were in the form of diaries. The AO noted that in the diaries, assessee s day to day transactions were entered. The AO further found that the transactions of cash payments for purchase of lands from various parties were noted in the diaries. The details of the transactions were compiled by the AO and the same were enclosed as Annexure E-35 of the Assessment Order. During the course of the assessment proceedings, the AO, vide her show-cause notice, required the assessee to furnish his explanation on this issue. In reply, the assessee furnished his explanation which has also been reproduced by the AO at para (18.1) on page no. 72 73 of the Order. However, the AO held that such documents contained the detail of bank transactions also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences deserve to be admitted. The appellant has also made counter comments and has made a rebuttal of the various observations and comments given by the AO in his remand report. 4.15.2 During the course of the appellate proceedings, the appellant also furnished his supplementary submission on the subject issue. The appellant also furnished a copy of the Special Auditors Report along with such submission which is carefully perused and placed on record. The sum and substance of the appellant s submission before me is that the diaries which have been made the sole basis for making impugned additions by the appellant were not written by him and further, these were not written even on his instructions. It was contended that in the said diaries, many of the jottings do not pertain to him and may either pertain to some other sister concerns of the appellant or to third persons whose affairs were also being looked after by the author of the diaries namely Shri Navdeep Shrivastava who has passed away. Thus, prima facie, the appellant has denied the reliability of jottings made in such diaries for making assessment in his case. On merits, the appellant made attempt that the necessary entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s viz. Annexure E-35(1) and Annexure E-35(2). It appears that such annexures have been taken by the AO from the Report submitted by the Special Auditors. The Special Auditors, in the Annexure E-35(1), have prepared financial year-wise group summary of Fixed Assets pertaining to A.Y. 2011-12 to A.Y. 2016-17 and on the basis of such working, the AO has made additions in the income of the appellant for various assessment years under the head Undisclosed Investment . Along with the Annexure E-35(1), the Special Auditors have also furnished the copies of the ledger accounts of various fixed assets, for various years, stated to have been drawn on the basis of diaries seized during the course of the search. 4.15.4 As the very basis for making the addition by the AO was the abstract from tally accounts prepared by the Special Auditors, a reference was necessarily required to be made to the Report of the Special Auditors on such abstract. Upon going through the Report of the Special Auditors, it was found that in such Report, the Special Auditors have furnished the particulars of the appellant for the various years in the prescribed Form No. 6B and along with such particulars, Schedules hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepared one Annexure-1 of Unsecured Loans giving the details of loans taken and repaid by the appellant during the periods under review and such annexure has also been submitted along with the Sub-schedule 5. In such Annexure-1, the name-wise details of unsecured loans allegedly taken by the appellant from the various persons for an aggregate sum of Rs.75,33,47,900/- have been shown. In the background of these facts, although, the appellant has strongly objected the authenticity and reliability of the personal diaries to be used against him as evidences, but, even if such objections are overruled, still, I find merit in one contention of the appellant that even if the working of the Special Auditors, which became the very basis for the impugned additions, are presumed to be correct, then also there being no allegation of any undisclosed income or undisclosed capital of the appellant, no addition could have been made. From the compilation of the personal diaries, it transpires that in such diaries, the very sources of making alleged investments have been shown to be out of unsecured loans taken by the appellant from various persons as per the details compiled by the Special Auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und during the course of the search, has drawn a table running into 4 pages containing the details of various properties, such as the description of the seized document, financial year, date, nature of the document, property details, area, name of the purchaser, name of the seller, fair market value, sale consideration and registry expenses. Further, the AO, in his findings given at para (28.2) of the impugned Order, could find three discrepancies only. Accordingly, in respect of the property transactions found to have been carried out by the appellant during the periods under assessment, addition of Rs.2,35,00,000/- was made for A.Y. 2011-12 and addition of Rs.10,00,000/- was made for A.Y. 2013-14. Against such additions, the appellant has taken separate grounds of appeal which have been adjudicated separately in the ensuing paras. In nutshell, wherever the AO found any discrepancy in the actual consideration paid by the appellant and that recorded in the books and as also, wherever the AO found that the appellant could not explain the sources of purchase of land, he has made separate additions vide para (28.3) of the impugned order. It is thus evident that the additions covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made by the AO at para (18.3) of the impugned assessment order are liable to be deleted. Accordingly, the additions of Rs.42,99,000/- in A.Y. 2011-12, Rs.30,07,050/- in A.Y. 2012-13, Rs.4,07,01,630/- in A.Y. 2013-14, Rs.2,49,47,481/- in A.Y. 2014-15, Rs.1,70,76,800/- in A.Y. 2015-16 and Rs.44,00,000/- in A.Y. 2016-17 on account of undisclosed investment in immovable properties are Deleted. Therefore, appeal on these grounds is Allowed. 13.4 Aggrieved with the relief granted by the ld. CIT(A), the revenue is in appeal before us. 13.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 13.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A), copies whereof have been filed before us in the Paper Books for the respective assessment years, and has also filed short hand notes before this Bench. 13.7 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides, Remand Report of the AO, Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the Revenue has taken separate grounds against such deletion of the addition, which has already been adjudicated by us by giving our findings in the preceding paras. While adjudicating the Ground on account of loans and advances, as aforesaid, we have already held that merely on the basis of jottings made in diaries, which are not in the nature of books of accounts, found from the possession and control of a third person, without having any other corroborative evidence and without making any inquiry, no addition was warranted. Since, for the issue in hand, the Ld.AO has relied upon the same diaries and documents, we have no hesitation to hold once again that merely on the basis of jottings made in the diaries, the subject additions made by the AO for various assessment years on account of undisclosed investment of the assessee in purchase of land and other properties is not legally justified. 13.10 We also find substance in the contention of the assessee that (i) the annexure, marked as E-35 by the AO, based upon which the additions were proposed, were not prepared by the assessee, but, these were prepared by the special auditors, without seeking explanation of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the AO has not made any inquiry from the sellers of the properties. 13.12 We also find that the AO at para (28.0) to (28.3) of her Order, has separately dealt with the issue of transactions of immovable properties found to have been carried out by the assessee during the assessment years under consideration. The AO, on the basis of various seized documents found during the course of the search, has drawn a table running into 4 pages containing the details of various properties, such as the description of the seized document, financial year, date, nature of the document, property details, area, name of the purchaser, name of the seller, fair market value, sale consideration and registry expenses. Further, the AO, in her findings given at para (28.2) of the Order, could find three discrepancies only. Accordingly, in respect of the property transactions found to have been carried out by the assessee during the periods under assessment, addition of Rs.2,35,00,000/- was made for A.Y. 2011-12 and addition of Rs.10,00,000/- was made for A.Y. 2013-14. Against such additions, the assessee had taken separate grounds of appeal before the ld. CIT(A) who has deleted such additions too and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to hereinabove. The Special Auditors further prepared a fund flow statement along with detailed ledger accounts of such transactions prepared from compilation of the personal diaries which have been given as per SubSchedule 5 of the Audit Report. Upon going through the Sub-schedule 5, a copy whereof has also been filed by the assessee in his Paper Book for A.Y. 2011-12 at page no. 253, it has been observed that it is in the form of a fund flow statement, drawn for the period from 01/04/2009 to 31/03/2016 in which on the upper part, inflow of funds have been shown and in the lower part, outflow of funds have been shown. In the above said Sub-schedule 5, the details of various fixed assets acquired by the assessee during the period from 01/04/2009 to 31/03/2016 have been shown to be at Rs.8,44,88,961/- only. The details of such fixed assets have been given in the Sub-Schedule 5 itself and we find that all the items of the land in respect of which the additions have been made, have duly been incorporated by the Special Auditors in the aforesaid Sub-Schedule 5. From the Sub-Schedule 5, as drawn by the Special Auditors, we further find that for the period from 01/04/2009 to 31/03/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources are such which can be regarded only as capital receipts in the hands of the assessee and by no stretch of imagination, such sources can be termed to be undisclosed income of the assessee. 13.14 Accordingly, in the light of the findings given hereinabove, we find no infirmity in the action of the ld. CIT(A) in deleting the additions amounting to Rs.42,99,000/- in A.Y. 2011-12, Rs.30,07,050/- in A.Y. 2012-13, Rs.4,07,01,630/- in A.Y. 2013-14, Rs.2,49,47,481/- in A.Y. 2014-15, Rs.1,70,76,800/- in A.Y. 2015-16 and Rs.44,00,000/- in A.Y. 2016-17. Resultantly, the Ground No. 3 of the Revenue for A.Y. 2011-12, A.Y. 2012-13, A.Y. 2013-14, A.Y. 2015-16; Ground No. 2 of the Revenue for A.Y. 2014-15 and; Ground No. 5 of the Revenue for A.Y. 2016-17 are hereby Dismissed. 14. Ground No. 5 of the Revenue for A.Y. 2011-12; Ground Nos. 9(a) 9(b) of the Assessee for A.Y. 2012-13; Ground Nos. 10(a) 10(b) of the Assessee for A.Y. 2013-14; Ground Nos. 8(a) 8(b) of the Assessee for A.Y. 2014-15; and Ground Nos. 11(a) 11(b) of the Assessee for A.Y. 2016-17 14.1 Through this ground of appeal, the revenue has challenged the action of the ld. CIT(A) in deleting the addition of Rs.1,95,00,000/- made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value shown in the registered document at Rs. 30,50,000/-. During the course of the assessment proceedings, the AO, vide his show-cause notice, required the assessee to furnish his explanation on this issue. In reply, the assessee submitted that the subject agreement was entered into by the assessee along with his real brother namely Shri Virendra Rai for purchase of plot in joint ownership. The assessee further submitted that out of the total agreed consideration of Rs.54,50,000/- as mentioned in the agreement, a sum of Rs.14,50,000/- through cheques and Rs.16,00,000/- through cash thereby aggregating to Rs.30,50,000/- only was paid by the assessee s brother Shri Virendra Rai and no payment was made by the assessee. The assessee also submitted that since the plot was under a legal dispute, the balance consideration of Rs.24,00,000/- was not paid which is also evident from the copy of agreement itself. The AO duly considered and accepted the payment of Rs.14,50,000/- as made through account payee cheques. However, the AO for the remaining amounts, treated the cash payment of Rs.16,00,000/- as unexplained and for the amount of Rs.24,00,000/- as outstanding due to legal dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total land area of 9.75 acres in the seized MOU. According to the ld. CIT(A), out of the total purchase consideration of Rs.1,58,86,680/-, the assessee had duly recorded a sum of Rs.40,48,370/- in his regular books of account which was evident from the copies of the audited financial statements of the assessee for F.Y. 2011-12 and F.Y. 2012-13. Thus, the ld. CIT(A) noted that out of the total purchase consideration of Rs.1,58,86,680/-, only a sum of Rs.40,48,370/- has been recorded by the assessee in his books of account and the remaining sum of Rs.1,18,38,310/- were not recorded in the books as has been admitted by the assessee himself. Accordingly, the ld. CIT(A) held the investment to the extent of Rs.1,18,38,310/- remained unexplained on this count. However, the ld. CIT(A) found that the payments aggregating to Rs.1,18,38,310/- were made by the assessee in four different assessment years viz. A.Y. 2012-13, A.Y. 2013-14, A.Y. 2014-15 A.Y. 2016-17 and not in the previous year relevant to A.Y. 2011-12 which is also evident from the jottings made in the seized diaries in respect of payments made to Shri Kamal Likhdhari and Shri Ramcharan Rathore which are pertaining to the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13. It is an undisputed fact that out of the total purchase consideration of Rs.1,58,86,680/-, only a sum of Rs.40,48,370/- has been recorded by the appellant in his books of account and the remaining sum of Rs.1,18,38,310/- were not recorded in the books as has been admitted by the appellant himself. Thus, the investment to the extent of Rs.1,18,38,310/- remained unexplained on this count. However, I find that the payments aggregating to Rs.1,18,38,310/- were made by the appellant in four different assessment years viz. A.Y. 2012-13, A.Y. 2013-14, A.Y. 2014-15 A.Y. 2016-17 and not in the previous year relevant to A.Y. 2011-12. On a perusal of the seized diaries, it is evident that the jottings in respect of payments made to Shri Kamal Likhdhari and Shri Ramcharan Rathore are pertaining to the payments made towards purchase of subject lands at Lalitpur only. Thus, it is crystal clear that since no payment has been made by the appellant during the previous year relevant to A.Y. 2011-12, no addition would be warranted in the A.Y. 2011-12. Accordingly, the addition of Rs.1,95,00,000/- so made by the AO in the appellant s income in A.Y. 2011-12 is Deleted. Therefore, appeal on these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, the appellant was also required to incur expenditure towards stamp duty and registration expenses to the extent of Rs. 12,76,130/-. Thus, in aggregate, the appellant was required to make payments aggregating to a sum of Rs. 1,58,86,680/- [Rs. 1,46,10,550/- (+) Rs. 12,76,130/-]. The appellant has furnished details of payments of Rs.1,58,86,680/- made by him in four different assessment years viz Rs.38,10,000/- in A.Y. 2012-13; Rs.1,14,76,680/- in A.Y. 2013-14; Rs.4,00,000/- in A.Y. 2014-15; and Rs.2,00,000/- in A.Y. 2016-17. Before me, the appellant claimed that out of the total purchase consideration of Rs.1,58,86,680/- so made by him in purchase of lands at Lalitpur, he had recorded a sum of Rs.40,48,370/- only in his regular books of account and the remaining sum of Rs.1,18,38,310/- was not so recorded. However, the additions were made in AY 2011-12 only. Therefore, during the course of appellate proceedings, notice of enhancement u/s 251(2) of the act was issued on 26.06.2020 and appellant was required to show cause as to why income for A.Y. 2012-13, A.Y. 2013-14, A.Y. 2014-15 and A.Y. 2016-17 amunting to Rs.35,10,000/-, Rs.77,28,310/- , Rs.4,00,000/- and Rs.2,00,000/- sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.40,00,000/- made by the AO in the assessee s income on account of unexplained investment in purchase of subject plot at Jokhanbag. The ld. CIT(A) has given the relevant findings in respect of the issue of unexplained investment in plot at Jokhanbag at para (4.17.2) of his Order, which are reproduced as under: 4.17.2 I have considered the facts of the case, the Assessment Order, the written as well as oral submissions of the appellant, the remand report of the AO and the rejoinder of the appellant. The said plot was purchased by the appellant and his brother Shri Virendra Rai in co-ownership. Further, during the course of the assessment proceedings themselves, the appellant has stated that out of the total consideration of Rs.54,50,000/-, only a sum of Rs.30,50,000/- was paid by his real brother Shri Virendra Rai and the balance consideration of Rs.24,00,000/- was payable due to some legal dispute. During the course of the appellate proceedings, the appellant furnished copies of registered purchase deeds in which there is a clear cut mention of the dispute which has got finally resolved through an Order dated 25.10.2018 passed by the District Collector, Jhansi. Thus, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-12. We find that in the instant case, the AO has made addition of a sum of Rs. 2,35,00,000/- in the income of the assessee, on account of unexplained investment, in respect of two properties viz. (i) Land situated at Lalitpur (Rs. 1,95,00,000/-) and (ii) Plot at 355, Jhansi Civil, Jokhanbagh (Rs. 40,00,000/-). From the table of the various immovable properties given by the AO at para (28) from page no. 98 to 101, we find that at page no. 101 the AO has given the basis for making the addition of Rs. 1,95,00,000/- on account of land at Lalitpur. From such details, we find that the very basis for making of the addition by the AO was some copy of Agreement found during the course of the search as inventorized as UPS-01-A5 Page No. 50 51. We find that a copy of such MOU has been filed by the assessee in his Paper Book filed for A.Y. 2011- 12 at page no. 129 130.On a perusal of such MOU, we find that such agreement was executed on 17/02/2012 between some Shri RamCharan Rathore Others and some Shri Kamal Likhdhari. As per such agreement, Shri Kamal Likhdhari had purchased the 9.75 acres land situated at Lalitpur from Shri R.C. Rathore but, failed to make the payment for agreed conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nothern India, as seller, and the assessee and his real brother, Shri Virendra Rai (PAN: AFGPR2874E) as joint purchasers for purchase of a plot admeasuring 2532.540 sq. meters situated at 355, Civil Jokhanbag, Jhansi for a total consideration of Rs. 54,50,000/-. We further find that as per the page no. 2 of the said agreement, up till the date of the execution of the agreement i.e. on 24/12/2010, the purchasers had made payment of a consideration of Rs.30,50,000/- and out of such consideration of Rs. 30,50,000/- , consideration to the extent of Rs. 14,50,000/- was made through various account payee cheques and remaining payment of Rs. 16,00,000/- has been stated to have been paid in the form of cash. We find that in respect of the payment amounting to Rs. 16,00,000/- made in the form of cash, before the AO, the assessee had contended that such payment was made by the other copurchaser of the property i.e. Shri Virendra Kumar Rai, but, such a claim of the assessee was not accepted by the AO. We find that in the agreement as well as in the sale deed, the name of the Shri Virendra Kumar Rai is clearly appearing as the co-purchaser and therefore, the submission of the assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 15.4 Now, we will take up the assessee s Ground of Appeals for A.Y. 2012-13, A.Y. 2013-14, A.Y. 2014-15 and A.Y. 2016-17 against the enhancement made by the CIT(A) u/s. 251(2) of the Act in respect of undisclosed investment of the assessee in Land at Village Lalitpur. We find that the ld. CIT(A) at para (4.16.14) has rightly given the finding that the assessee had made undisclosed investment aggregating to Rs. 1,18,38,310/- and such undisclosed investment was not made by the assessee during the A.Y. 2011-12, as wrongly held by the AO, but, factually, such investment was made by the assessee in subsequent years viz. A.Y. 2012-13, A.Y. 2013-14, A.Y. 2014-15 and A.Y. 2016-17. We find that the ld. CIT(A) has rightly determined the quantum as well as the assessment year for the undisclosed investment made in various years based upon the incriminating materials. We find that as against the total investment in the land at Rs. 1,58,86,680/-, the assesee has recorded investment to the extent of Rs. 40,38,370/- only in his regular books of account and for the remaining sum of Rs. 1,18,38,310/-, the assessee could not furnish any documentary evidence neither before the authorties below, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, but, as per the findings given by the AO herself, at last para of page no. 50, the submission of the assessee was found correct. We find that on the basis of this table only, the AO has made an addition of Rs. 74,80,454/- in the assessee s income for A.Y. 2014-15 on account of unexplained capital investment in syndicate. It is therefore, instead of going by the theory of profit for every year, we would place our reliance on the aforesaid table titled as MS-1 . From such table, we find that after considering the share of profit of the assessee for each of the assessment years, amount of fresh investment towards capital in the various syndicates and amount of withdrawals from the capital of such syndicates, in the last column no. 8, the amount of fresh capital invested has been reflected and since, all these figures are in negative, it has been interpreted that in the concerning assessment years, the assessee had not made fresh investments, but, rather made over withdrawals from the capital in various syndicates. We find that as on 31/03/2011, a fund amounting to Rs. 69,98,079/- was available with the assessee in the form of accumulated sum of withdrawals from the capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily taken as the explained sources for making any investment. From the table given above, it is evident that even after considering the unrecorded investment in the land, the ample of funds remained available in the hands of the assessee for making utilization thereof. In our considered view, the provisions of s. 69, 69A and 69B etc. contemplate the investments the sources whereof remained unexplained and it does not contemplate deeming any income on the sole basis of recording or non-recording of any investment in the books of account. Although, in the instant case, the payments made by the assessee for purchase of the land, over and above that stated in the registered sale deeds remained unrecorded in the regular books of account, but, such fact alone cannot be a basis for making the addition if the assessee is in a position to demonstrate the sources of making such investments and in respect of such sources of investments, the assessing officer has already made additions. In our considered view, even if the income from the syndicates remained exempted in the hands of the assesee because of the operation of the law, but, at any rate, the credit for such income deserves to be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, required the assessee to furnish his explanation on this issue. In reply, the assessee made his explanation which is also reproduced by the AO at para (21.1) on page no. 83 of the impugned Order. The assessee claimed that out of the total seven items listed in said loose papers, two items aggregating to Rs.1,22,89,648/- were mere estimates and dumb documents. The assessee further claimed that the third item of Rs.31,23,000/- pertained to the list of jewelleries of the assessee and his family members which were acquired as stridhan/ gift and were pledged with Canara Bank, Jhansi for obtaining gold loan. The assessee also claimed that the remaining four items aggregating to Rs.68,75,000/- were based on jottings made in the diary which was written by the deceased accountant of the assessee Shri Navdeep Shrivastava and the notings of such items were not belonging/ pertaining to the assessee. The AO, discarding and disregarding the entire explanation of the assessee, made additions of Rs.31,500/- and Rs.2,22,56,148/- respectively in A.Y.2013-14 and A.Y.2015-16 on account of assessee s unexplained expenditure in purchase of jewelleries. 16.3 Aggrieved with the Order of Assessment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Smt Meena Rai and Shri Manish Rai noted that on the basis of the list of jewelleries, the bank had assessed the market value of jewelleries weighing 1735.5 gms. at Rs.41,64,000/- and after computing the eligibility for a loan of Rs.31,23,000/-, has duly sanctioned a sum of Rs.30,00,000/- to the assessee, his wife Smt. Meena Rai and his son Shri Manish Rai. The ld. CIT(A) further observed that the assessee claimed that these jewelleries were acquired by him and his family members as Stridhan/ Gift/ or by inheritance from their ancestors. The ld. CIT(A) also noted that during the course of the search and seizure operations, no adverse inference was drawn by the search party as regard to such jewelleries and even the AO, in the impugned Order, has not given any adverse finding to this effect. However, as regard the claim of the assessee to have acquired the jewelleries as Stridhan/ gift being fully covered by the CBDT Instruction No. 1916, the ld. CIT(A) noted that according to the CBDT Instruction, the assessee and his family members, consisting of two married ladies and three males, were eligible for jewelleries held as stridhan for an aggregate weight of 1300 gms. (100+500+500+10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant for his counter comments. The appellant, in his rejoinder dated 25.06.2020, submitted that the AO has not made any comments on the contents of the additional evidences furnished by the appellant and had not brought any adverse material on record to prove that any such jewellery was actually purchased by the appellant. I find merit in the contention of the appellant that the AO could not bring any adverse corroborative material on record which could prove the actual purchase of jewelleries by the appellant. I also find that the AO had not controverted the contents of the affidavit furnished by the appellant. I am of the firm view that any transaction found noted on any estimate is not conclusive and for confirming that any transaction had actually taken place, all the surrounding factors and documents are also required to be taken into consideration. Sole reliance on the estimate which does not contain the name of the appellant cannot be the basis for making any addition in the hands of the appellant. In my considered view, as per the settled law, the initial onus lies upon the assessing officer that the assessee had made any investment or had incurred any expenditure and once t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shri Navdeep Shrivastava on 11-04-2017 at page no. 271 of the Paper Book for A.Y. 2011-12 filed before me. I have also gone through the statements of Late Shri Navdeep Shrivastava recorded u/s. 133A during the course of the simultaneous survey carried out in one of the premises of the appellant namely M/s. Hotel Ambrosia, Nanak Ganj, Jhansi by the survey party. As regard the authenticity of the various transactions found noted in the personal diaries of Shri Navdeep Shrivastava, while adjudicating the ground nos. 12(a) 12(b) for A.Y. 2011-12, ground nos. 10(a) 10(b) for A.Y. 2012-13 A.Y. 2016-17, ground nos. 11(a) 11(b) for A.Y. 2013- 14 A.Y. 2015-16 and ground nos. 9(a) 9(b) for A.Y. 2014-15, I have already given my finding that these diaries cannot be a sole basis for any addition in the hands of the appellant. The transactions of some other persons/ entities, other than the appellant, were also noted. Further, the Special Auditors, in the subschedule 5 of their Report, which has been prepared by the Special Auditors on the basis of tally datas, which in its turn, were based upon various diaries and loose papers seized during the course of the search, have reported total invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asion of purchase of jewellery, the appellant was having sufficient cash balance as per such cash book. The AO except placing reliance on such jottings made in diaries could not bring on record any other corroborative evidence to demonstrate that the appellant had purchased the aforesaid jewelleries amounting to Rs.68,75,000/-. Even during the course of the search, the appellant was not found to be in possession of any undisclosed jewellery. In view of such facts and circumstances, I do not find any merit in the addition made by the AO on account of undisclosed jewellery qua the aforesaid amount of Rs.68,75,000/-, which has been so made and included in the addition of Rs.2,22,56,148/- for A.Y. 2015-16. 4.19.3 Further, as regard the list of jewelleries valuing Rs.31,23,000/- as noted on the loose paper inventorized as UPO-2, LP-4, Page no. 9, these jewelleries were belonging to the appellant and his family members pledged by the appellant to Canara Bank for obtaining gold loan. I also find that the loose paper is prepared by the bank for pledging the jewelleries for gold loan. I also noted that on the basis of the list of jewelleries, the bank has assessed the market value of jewell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -16 and addition of Rs. 31,500/- in AY 2013-14 is Deleted. Therefore, apepeal on these grounds is Partly Allowed. 16.4 Aggrieved with the additions deleted by the ld. CIT(A), the revenue is in appeal before us. Whereas as against the additions confirmed by the ld. CIT(A), the assessee has preferred an appeal before us. 16.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 16.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand notes before this Bench. 17.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. 17.2 We find that the AO vide para (21.3) of her Order, has made the addition of Rs. 31,500/- for A.Y. 2013-14 and of Rs. 2,22,56,148/- for A.Y. 2015-16 on account of assessee s unexplained investment in jewellery. We find that the AO has made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a right finding that out of the aforesaid additions of Rs. 2,22,56,148/-, only the addition to the extent of Rs. 7,83,674/- was sustainable. We find that in respect of the two loose papers inventorized as UPO-2, LP-1, Page no. 121 122 for a sum of Rs.1,22,58,148/-, the ld. CIT(A) has rightly held that these loose papers were in the form of estimates only and anywhere the same are not containing the name of the assessee. We find that during the course of the appellate proceedings, the assessee, in support of his contention to the effect that the jewelleries mentioned in the aforesaid estimates were not actually purchased by him had furnished an Affidavit before the ld. CIT(A) and a copy of such Affidavit along with other documents were forwarded by the ld. CIT(A) to the AO vide his Office letter dated 24/07/2019. We find that the AO, in his Remand Report has simply objected the acceptance of the Affidavit as additional evidences, but could not rebut the contents of the Affidavit by conducting any inquiry or bringing any adverse material against the assessee on record. We are of the view that any transaction found noted on any estimate is not conclusive and for confirming that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by some Mr. Navdeep Shrivastava, who although alive at the time of the search, but had passed away at the time of passing the impugned Order. We find merit in the contention of the assessee that the diaries referred to by the AO, were not containing the details of the transactions carried out by the assessee only but it also contained those jottings which were carried out by some other assessees/ entities and therefore, without having any other corroborative evidence, the diaries, which cannot be considered to be books of account, by themselves, have no evidentiary value and therefore, merely on the basis of such diaries, no addition could have been made. We find that on the basis of the same diaries, the AO had also made other additions in the income of the assessee for the various assessment years on account of assessee s investments in making loans and advances and as also, in purchase of immovable properties and while adjudicating the grounds raised by the Revenue on these counts against the relief granted by the ld. CIT(A), we have already adjudicated (supra) that merely on the basis of the said diaries, which were recovered from a third person who was found to have been makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous other investments made by the assessee during the aforesaid period were mainly out of the unsecured loans noted in such diaries. We find that the AO except placing reliance on such jottings made in diaries could not bring on record any other corroborative evidence to demonstrate that the assessee had purchased the aforesaid jewelleries amounting to Rs.68,75,000/-. We find that the ld. CIT(DR) could not rebut the findings given by the ld. CIT(A) that during the course of the search, the assessee was not found to be in possession of any undisclosed jewellery. In view of such facts and circumstances, we do not find any infirmity in the action of the ld. CIT(A) in further granting a relief of Rs. 68,75,000/- to the assessee out of the total additions for A.Y. 2015-16 made by the AO at Rs. 2,22,56,148/- on account of undisclosed jewellery which were solely based on the jottings made in some seized diaries. 17.6 Now, coming to the remaining addition of Rs. 31,23,000/- pertaining to A.Y. 2015-16, we find that such addition has been made the AO on the basis of one loose paper inventorized as UPO-2, LP-4, Page no. 9. A copy of such loose paper has been been placed by the assessee in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or jewelleries held as stridhan, there would still remain a shortfall of 435.5 gms. which remains unexplained. Accordingly, we find no inconsistency in the findings given by the ld. CIT(A) that the jewelleries weighing 435.500 grams valuing Rs. 7,83,674/- remained unexplained by the assessee. Thus, we find no infirmity in the action of the ld. CIT(A) in confirming the addition to the extent of Rs. 7,83,674/- out of the addition of Rs. 31,23,000/- made by the AO on the basis of loose paper seized and inventorized as UPO-2, LP-4, Page No. 9. Thus, we find ourselves in full agreement with the findings given by the ld. CIT(A) that the additions amounting to Rs. 31,500/- made by the AO in the assessee s income for A.Y. 2013-14 and Rs. 2,14,72,474/-, out of the total additions of Rs. 2,22,56,148/- made by the AO, for A.Y. 2015-16, were not justified and addition of Rs. 7,83,674/- only for A.Y. 2015-16 was sustainable on account of unexplained expenditure in jewellery. Accordingly, the Ground No. 4 of the Revenue for A.Y. 2013-14; Ground no. 5 of the Revenue for A.Y. 2015-16 and as also, Ground Nos. 10(a) 10(b) of the Assessee for A.Y. 2015-16 are hereby Dismissed. 18. Ground No. 6 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 and Rs. 7,00,000/- on 20-04-2012. The ld. CIT(A) noted that the payments made towards purchase of the said property were fully recorded in audited books of account. The ld. CIT(A) also noted that the payments were made through banking channels and the same were also reflected in bank statement placed on record. Accordingly, the ld. CIT(A) deleted the entire addition made by the AO on this count. The ld. CIT(A) has given the relevant findings at para (4.18.1) of his order which are reproduced as under: 4.18.1 During the course of the appellate proceedings, the appellant submitted that the entire payment consideration of Rs.20,00,000/- has been made by him through account payee cheques which is also evident from the copy of the registered sale deed and the entire purchase consideration towards purchase of agricultural land was duly recorded in the audited financial statements. The appellant further submitted that the AO was mistakenly looking for a single payment of Rs. 10,00,000/- in the bank statement of the appellant, whereas, in fact, the appellant had made aggregate payment of Rs. 10,00,000/- to Shri Kamal Likhdhari, the seller of the land, in two trenches viz. Rs. 3,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making of payment is clearly visible. Further, from the audited financial statements of the assessee placed at page no. 190 191 of the Paper Book for A.Y. 2011-12, we find that in the details of bank accounts, the account of the assessee with Punjab National Bank is also getting reflected. Thus, we find sufficient merit in the contention of the assessee that all the payments towards purchase consideration aggregating to Rs. 20,00,000/- was made by the assessee in three trenches through account payee cheques only which were duly recorded in the audited books of account of the assessee. Thus, we find no infirmity in the action of the ld. CIT(A) in deleting the addition of Rs. 10,00,000/- made by the AO in the assessee s income on account of unexplained investment in purchase of land at Lalitpur for A.Y. 2013-14. Accordingly, the Ground No. 6 of the Revenue for A.Y. 2013-14 is hereby Dismissed. 20. Ground No. 7 of the Revenue for A.Y. 2013-14; Ground No. 4 of the Revenue for A.Y. 2014-15; and Ground No. 9 of the Assessee for A.Y. 2013-14 20.1 Through these Grounds, for the various assessment years, the revenue has challenged the action of the ld. CIT(A) in deleting the addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Beer Wines Ltd.. Further, in respect of the addition of Rs.13,53,960/- so made for A.Y. 2014-15, the assessee claimed that out of the total amount of Rs.13,53,960/-, the amount of Rs.12,53,962/- does not pertain to any cash payment but the same represented the cash balance on a particular day. Before the ld. CIT(A), the assessee further claimed that the source of the cash balance of Rs.12,53,962/- was only from his regular liquor business and in support of such claim, the assessee produced his regular cash book, as maintained by him in the ordinary course of his business. Further, in respect of the remaining amount of Rs.1,00,000/- for A.Y. 2014-15, the assessee stated before the ld. CIT(A) that such jotting has got misread by the AO as Rs.1,00,000/- instead of the correct jotting for a sum of Rs.10,00,000/-. It was further claimed by the assessee that the said jotting of Rs.10,00,000/- was actually pertaining to a fund transfer through RTGS by him in favour of his sister concern namely M/s. Regent Beer and Wines Ltd. and in support of his contention, the assessee furnished a copy of his relevant bank statement showing the remittance of funds as additional evidence. A copy of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ister concern namely M/s. Regent Beer Wines Ltd.. Further, in respect of the addition of Rs.13,53,960/- so made for A.Y. 2014-15, the appellant claimed that out of the total amount of Rs.13,53,960/-, the amount of Rs.12,53,962/- does not pertain to any cash payment but the same represented the cash balance on a particular day. It has been further claimed by the appellant that the source of the cash balance of Rs.12,53,962/- was only from his regular liquor business. In support of his aforesaid contentions, the appellant produced the cash book maintained by him in the regular course of his liquor business and copies of relevant abstracts have also been submitted by the appellant in his Paper Books for A.Y. 2013-14 and A.Y. 2014-15. Further, in respect of the remaining amount of Rs.1,00,000/- for A.Y. 2014-15, the appellant stated that such jotting has got misread by the AO as Rs.1,00,000/- instead of the correct jotting for a sum of Rs.10,00,000/-. It has been claimed by the appellant that the said jotting of Rs.10,00,000/- was actually pertaining to a fund transfer through RTGS by him in favour of his sister concern namely M/s. Regent Beer and Wines Ltd. In support of his contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... papers inventorized as Page No. 3, 4 and 13 of BS-01 (Diary) found and seized during the course of the search. The CIT(A)-3 passed on the information while adjudicating the appeals of one of the group assesses namely Shri Manish Rai before him. The CIT(A)-3 found that during the course of the appellate proceedings of Shri Manish Rai, Shri Ramesh Chandra Rai (the assessee in the present case) had furnished one Affidavit before him owning the transactions contained in the said seized documents as belonging to himself and as also, one of his group company, namely, Regent Beers and Wines Ltd. On the basis of the information so passed on, the AO made the subject additions in the assessee s income. 21.2 We have gone through the Affidavit duly sworn before Notary Public dated 08/06/2018, given by the assessee before the CIT(A)-3, Bhopal, a copy whereof is placed at page no. 242 of the assessee s Paper Book for A.Y. 2013- 14. On a perusal of such Affidavit, we find that in such Affidavit, the assessee had stated that the transactions contained in the seized documents inventorized as Page No. 3,4 13 were pertaining to himself and as also, to one of his companies namely Regent Beer and Wine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee that out of the total amount of Rs.13,53,960/-, the amount of Rs.12,53,962/- does not pertain to any cash payment but the same represented the cash balance on a particular day. On examination of the seized page of the diary, we find that at the right hand side, two items are appearing for an aggregate sum of Rs. 12,97,762/- and correspondingly, at the left hand side, one item of Rs. 43,800/- has been mentioned by working out the balance of Rs. 12,53,962/-. Thus, we find that the subject jotting of Rs. 12,53,962/- does not represent any transaction but it is the arithmetical balances of certain transactions carried out on a particular day. We also find substance in the assessee s contention that the source of the cash balance of Rs.12,53,962/- was only from his regular liquor business and in support of such contentions, we find that the assessee has filed a copy of abstract of his regular cash book for the transactions carried out by him on the relevant date i.e. on 20/06/2013 and in such cash book, the opening cash balance and sales for the day are reflecting respectively at Rs. 1,18,88,632/- and Rs. 12,10,690/-. Further, in respect of the remaining amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired the assessee to furnish his explanation on the subject loose papers. The assessee, in response, made his explanation on the subject issue that the entire investment in the said partnership firm was made by him out of his explained and disclosed sources of income only. The assessee, in respect of the interest on capital, submitted before the AO that the interest amounts so noted on such loose papers were merely rough calculations made by the partners and factually, he had not received any interest of even a single penny from the said firm. The AO, after considering the explanation of the assessee, duly accepted the amount of capital investment in the firm out of explained sources of the assessee. However, in respect of the interest on capital, the AO noted that the assessee could not produce any evidence in respect of non-receipt of interest. Accordingly, the AO made additions of Rs.17,64,700/- in A.Y. 2014-15, Rs.66,28,363/- in A.Y. 2015-16 and Rs.17,28,790/- in A.Y. 2016-17 in the assessee s income on account of undisclosed interest income from M/s. Jai Baba Construction. 22.3 Aggrieved with the Order of Assessment, the assessee preferred separate appeals for the subject ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the Assessment Order, the written as well as oral submissions of the appellant, the remand report of the AO and the counter comments of the appellant. The appellant is a partner in the partnership firm M/s. Jai Baba Construction and has made capital investment out of explained source of income. M/s. Jai Baba Construction is a partnership firm which is getting assessed to income tax under PAN AADFJ3459M and is also filing its returns of income. On a perusal of the income tax return and audited financial statements of M/s. Jai Baba Construction for the three financial years viz. F.Y. 2013-14, F.Y. 2014-15 and F.Y. 2015-16, the partnership firm had not claimed payment of any interest on the outstanding balances of partners capital and thus, had not claimed any deduction u/s. 40(b) of the Act. I find merit in the contention of the appellant that as per the explicit proviso to clause (v) of section 28 of the Act, where any interest, salary, bonus, commission or remuneration which has not been allowed to the partnership firm under s. 40(b), the same shall not be subjected to tax in the hands of any partner, in their individual capacities. However, the AO, except relying upon the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, we find that in the present case, the AO, except relying upon the subject loose paper, could not bring any adverse material on record to establish receipt of interest income by the assessee from the partnership firm. It was further observed that even during the course of remand proceedings, the AO failed to controvert the evidences furnished by the assessee. Thus, we do not find any infirmity in the action of the ld. CIT(A) in deleting the subject additions of Rs. 17,64,700/- in A.Y. 2014-15, Rs.66,28,363/- in A.Y. 2015-16 and Rs.17,28,790/- in A.Y. 2016-17 made by the AO on account of undisclosed interest income from the partnership firm M/s. Jai Baba Construction. Consequently, the Ground No. 1 of the Revenue for A.Y. 2014-15; Ground No. 2 of the Revenue for A.Y. 2015-16; and Ground No. 3 of the Revenue for A.Y. 2016-17 are hereby Dismissed. 24. Ground No. 4 of the Revenue for A.Y. 2015-16; and Ground Nos. 9(a) 9(b) of the Assessee for A.Y. 2015-16 24.1 Through the Ground No. 4 for A.Y. 2015-16, the revenue has challenged the action of the ld. CIT(A) in deleting the addition to the tune of Rs.51,00,000/- out of the total addition of Rs.1,27,32,770/- made by the AO on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention, the assessee furnished a copy of the relevant bank statement, showing the cash withdrawals of Rs. 51,00,000/- made on 05-02-2015. The assessee also furnished certain additional evidences in the form of a copy of the relevant abstract of the cash book of the liquor business dated 05-02-2015, showing withdrawals of Rs.51,00,000/- in the name of the assessee and a copy of the relevant abstract of the cash book of the assessee dated 08-02-2015, showing the re-deposition of cash by the assessee in his liquor business. The ld. CIT(A), after considering the remand report and the rejoinder of the assessee on this issue, accepted the contention of the assessee to the extent of Rs.51,00,000/-. However, as regard to the remaining addition of Rs.76,32,770/-, the ld. CIT(A) held that the assessee himself accepted of having incurred expenditure on marriage but could not explain the sources of such expenditure and therefore, out of the total addition of Rs.1,27,32,770/- made by the AO in the assessee s income on this count, the ld. CIT(A) deleted the addition of Rs.51,00,000/- thereby confirming the remaining addition of Rs.76,32,770/- in the hands of the assessee for A.Y. 2015-16. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting that the subject additional evidences were already furnished by the appellant before the AO during the course of the assessment proceedings and no fresh evidence on this issue has been furnished by the appellant to substantiate his claim in respect of the utilization of cash of Rs.51,00,000/-. The remand report of the AO was provided to the appellant for his counter comments. The appellant, in his rejoinder dated 25.06.2020, submitted that the AO has not made any comments on the contents of the additional evidences furnished by the appellant. 4.22.2 I find sufficient merit in the contention of the appellant that for the purpose of utilization of cash of Rs.51,00,000/- as noted on loose paper page no. 163, a cash withdrawal of Rs.51,00,000/- was made by him on 05.02.2015 from his bank account which is clearly evident from the copy of the bank statement furnished by the appellant. Such assertion of the appellant also gets fortified from the loose paper bearing page no. 162 containing the details of receipts on account of son s marriage. The cash withdrawal of Rs.51,00,000/- has also been shown by the appellant in his capital withdrawals. The appellant has duly re-deposited such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Auditors Report and as also, written and oral submissions made from both the sides. 25.2 We find that the subject addition of Rs. 1,27,32,770/- has been made by the AO on the basis of some documents seized/impounded as LP-3, Page 163 from one of the premises of the assessee i.e. from Hotel Ambrosia at Jhansi. We find that copy of such loose paper has been filed by the assessee at page no. 178 of his Paper Book fro A.Y. 2015-16. A copy of such seized document has also been scanned by the AO at page no. 76 of her Order. We find that such seized document is in the form of one handwritten paper in which the details of some expenditure, aggregating to a sum of Rs. 1,27,32,770/-, relating to some marriage have been found noted. We find that in such seized document, on 06/02/2015, an sum of Rs.51,00,000/- has been mentioned. In respect of such item of Rs. 51,00,000/- as found noted in the seized document, we find sufficient merit in the contention of the assessee that on 06-02-2015, there was Tilak Ceremony function of the assessee s son namely Shri Manish Rai. The assessee stated that in Jaiswal Community, there is a ritual or practice to showcase fresh notes in the Tilak Ceremony to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his count from the assessee s income for A.Y. 2015-16. Consequently, the Ground No. 4 of the Revenue for A.Y. 2015-16 is hereby Dismissed. 25.3 Now, we would take up the assessee s appeal against maintaining the addition to the extent of Rs. 76,32,770/- by the ld. CIT(A) on account of marriage expenses. We find that the subject document was seized from the premises relating to the assessee only and further, some of the contents of such seized document has also been admitted by the assessee and even found recorded in his regular books of account and therefore, there cannot be raised any doubt against the evidentiary value of the seized document. Since, in the seized document there is a clear mention of incurrence of expenditure to the extent of Rs. 1,27,32,770/- out of which only a sum of Rs. 51,00,000/- was found recorded in the regular books of account of the assessee, the remaining expenditure of Rs. 76,32,770/- remained unrecorded as rightly determined by the ld. CIT(A). 25.4 Having given our findings as regard to the making of unrecorded expenditure to the extent of Rs. 76,32,770/- incurred by the assessee for solemnizing the marriage of his son, as aforesaid, now, we have to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal invested has been reflected and since, all these figures are in negative, it has been interpreted that in the concerning assessment years, the assessee had not made fresh investments, but, rather made over withdrawals from the capital in various syndicates. We find that as per the Table MS-1, as on 31/03/2014, a fund amounting to Rs. 7,26,99,684/- was available with the assessee in the form of accumulated sum of withdrawals from the capital of various syndicates, which in its turn, got either built up by the assessee s own investment or his share in profit from the syndicates. However, we are conscious of the fact that on the similar reasoning, while adjudicating the various grounds of the assessee raised vide Ground Nos. 9(a) 9(b) for A.Y. 2012-13; Ground Nos. 10(a) 10(b) for A.Y. 2013-14; Ground Nos. 8(a) 8(b) for A.Y. 2014-15; and Ground Nos. 11(a) 11(b) for A.Y. 2016-17, we have already granted the benefit of telescoping of income to the assessee. Therefore, for the purpose of examining the claim of the assessee, we will have to re-draw the table of availability of funds in the hands of the assessee during the relevant period of incurrence of the subject expenditure of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording or non-recording of any expenditure or investment in the books of account. Although, in the instant case, certain payments made by the assessee for incurrence of marriage expenditure remained unrecorded in his regular books of accounts, but, such fact alone cannot be a basis for making the addition if the assessee is in a position to demonstrate the sources of incurring such expenditure and in respect of such sources of expenditure, the assessing officer has already made additions. In our considered view, although the income from the syndicates remained exempted in the hands of the assesee because of the operation of the law, but, at any rate, the credit for such income deserves to be given to the assesseee for explaining the sources of other investments or expenditure. Thus, on the theory of telescoping for which the assessee is legally entitled to, we find no merit in the action of the ld. CIT(A) in sustaining the addition to the extent of 76,32,770/- in A.Y. 2015-16, towards the unexplained marriage expenses. Accordingly, such additions of Rs. 76,32,770/- are also directed to be deleted. Resultantly, the Ground No. 9(a) and 9(b) of the Assessee for A.Y. 2015-16 are hereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant that the sources of cash of Rs.14,46,530/- found from the office premises of the appellant situated at Indore were out of the cash available with the appellant as on 06-01-2016. I found substance in the appellant s submission that such cash was available with him in the regular course of his liquor business. On perusal of copy of regular cash book it was observed that appellant was having sufficient cash in hand as on 06.01.2016. the appellant has also contended that the cash book was also produced before the AO during the course of the assessment proceedings. In such circumstances, the appellant could explain the sources of cash found from his possession and therefore, no addition on this ground was warranted. Thus, addition made by the AO amounting to Rs.14,46,530/- is Deleted. Therefore, appeal on theis ground is Allowed. 26.4 Aggrieved with the addition deleted by the ld. CIT(A), the revenue is in appeal before us. 26.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 26.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Hotel Ambrosia, Nanak Ganj, Jhansi belonging to the assessee, some incriminating documents inventorized as LP-1, backside of Page-29, were found and impounded. The scanned copy of the seized document has been reproduced by the AO at page no. 69 of her Order. From such loose paper, the AO noted that the assessee had made investment of Rs.5,85,00,000/- in shares of one company namely M/s. Agrawal Distilleries Pvt. Ltd. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation on the subject issue. The assessee furnished his explanation which has also been reproduced by the AO at para (17.1) on page no. 69 to 71 of the impugned Order. The assessee claimed that since the subject loose paper had neither been prepared by him or on his instructions and therefore, no adverse inference could have been drawn against him on the basis of such loose paper. The assessee further contended that as against the notings made on the subject loose paper for 20% shareholding to be bought by the assessee in the said company for a total consideration of Rs.5,85,00,000/-, the assessee had actually made an investment only in respect of 12% shares of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written as well as oral submissions of the appellant. As regard to the evidentiary value of the loose paper, I am in full agreement with the findings given by the AO in the body of the assessment order that authenticity of the incriminating seized loose paper cannot be doubted. It is undisputed fact that the subject seized paper was impounded from the business premises of Hotel Ambrosia, Jhansi, a concern of which the appellant was the Proprietor. It is also clear from the subject loose paper that the appellant along with other three persons, have made investment for purchases of some shares in a company named and titled as M/s. Agrawal Distilleries Pvt. Ltd., the name whereof has clearly been mentioned in the subject seized document. Since, the document was found from the appellant himself, its evidential value cannot be doubted. On a perusal of such loose paper, it transpires that the appellant had purchased 20% shares in the above named company for a total consideration of Rs. 5,85,00,000/- and out of such consideration, a sum of Rs.2,80,00,000/- was required to be paid in the form of cheque and the remaining sum of Rs.3,05,00,000/- was required to be paid in cash. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion made before the ld. CIT(A) and has also filed short hand notes before this Bench. 28.7 Before us, the ld. counsel of the assessee, in addition to relying upon his written submissions, had raised an alternate plea that first of all the assessee had not made unexplained investment in acquisition of share of M/s. Agrawal Distilleries Private Limited (in short ADPL), as has been alleged by the AO, but, even otherwise, if it is presumed that the assessee had made unexplained investment to the extent of Rs. 71,00,000/- as held by the ld. CIT(A) then also, the investment not having been made during the previous year relevant to A.Y. 2016-17, no addition was warranted on this count. 28.8 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We have carefully gone through the subject loose paper seized from the premises of the assessee, inventorised as Page 29, (UPO-2) LP-1, placed at Page No. 170 of the Paper Book fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h or cheque and since, as against such 20%, the assessee has only acquired 12% share, the assessee s share of investment will have to be re-computed on pro-rata basis which works out to be at Rs.3,51,00,000/- and since, as per the AO s own finding, the assessee had found to have made investments to the extent of Rs. 2,80,00,000/- through banking channels, the balance amount of the investment i.e. Rs. 71,00,000/- remained unexplained and therefore, such amount of unexplained investment was rightly determined by the ld. CIT(A). 28.9 However, as regard to the year of making of the aforesaid amount of unexplained investment by the assessee, we find that during the previous year relevant to the assessment year under consideration, since, the assessee had not purchased any shares of ADPL therefore, no addition qua the investment made in shares of ADPL can be subjected to tax during the relevant assessment year. On careful examination of the Audited Financial Statement of the ADPL, as placed at page no. 183 of the assessee s Paper Book for A.Y. 2016-17, we find that as per such balance sheet, the assessee had become shareholder in the ADPL holding 12% share in the company. We find that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stated facts of the issue, as emerging out from the assessment order, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of a third person namely Shri J.P. Gupta situated at Jhansi (U.P.), one loose paper inventorized as UPO-01, LP-1, Page no. 13 was found and seized. The AO, from such loose paper, noted that it was containing jottings for receipt of a sum of Rs.11,00,000/- by the assessee from Shri Geda Ji against sale of share in Jokhanbag Site. During the course of the assessment proceedings, the AO vide a show-cause notice, required the assessee to make his explanation on the subject loose paper. In reply, the assessee claimed that such loose paper was neither found from his possession nor it was prepared on his instruction and the same was neither in his handwriting nor contained his signature and thus, no adverse inference could be drawn against him u/s. 292C of the Act. The assessee further claimed that he was not having any property in Jokhanbag Site. However, the AO, by rejecting the explanation of the assessee, made an addition of Rs.11,00,000/- on account of undisclosed income of the assessee from some Geda Ji ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d neither make any such enquiry from Shri J.P. Gupta regarding contents of the loose paper nor enquired anything regarding identity of Shri Geda Ji. I also find that the AO had not brought any corroborative adverse material on record which could prove the receipt of Rs.11,00,000/- by the appellant. In my considered view, without making necessary enquiries from the concerned person from whom the subject loose paper was seized, no presumption under the provisions of s.292C of the Act could be drawn against the appellant. I also find that the jottings made on such loose paper were made in English language and it contained signatures of two persons in English. I find that the appellant is an under-literate person who cannot make his signature in English. Thus, the appellant was able to demonstrate that such loose paper was not bearing his signature. Further, during the course of the search operations, in the various premises of the appellant, not a single document or loose paper was found evidencing receipt of the alleged sum of Rs.11,00,000/- from some Mr. Geda. Also the AO could not bring on record evidencing transfer of any portion of property situated at Jokhanbag which could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orative adverse material on record which could prove the receipt of Rs.11,00,000/- by the assessee. In our considered view, without making necessary enquiries from the concerned person from whom the subject loose paper was seized, no presumption under the provisions of s.292C of the Act could have been drawn against the assessee. We also find that during the course of the search operations, in the various premises of the assessee, not a single document or loose paper was found evidencing receipt of the alleged sum of Rs.11,00,000/- from some Mr. Geda. Furthermore, the AO could not bring on record evidencing transfer of any portion of property situated at Jokhanbag which could have been either in the form of agreement to sale coupled with possession or a sale deed. We are in agreement with the findings of the ld. CIT(A) that even if it is presumed that the assessee was in receipt of a sum of Rs.11,00,000/- against release of 2% share in the land at Jokhanbag, the same would only partake character of an advance unless and until it is proved by any positive material on record that against such receipt, any transfer of property as contemplated under s.45 read with section 2(47) had tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO on this count. The ld. CIT(A) has given the relevant findings at para (4.28.1) of his order which are reproduced as under: 4.28.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. I find merit in the contention of the appellant that the sources of cash of Rs.9,23,800/- found from the bank lockers of the family members of the appellant were out of the cash available with the appellant as on 06-01-2016. I found substance in the appellant s submission that such cash was available with him in the regular course of his liquor business. I have verified such fact from the copy of the regular cash book produced before me. It was submitted that such cash book was also produced before the AO during the course of the assessment proceedings. I found that the AO could not controvert such fact and has also not brought on record utilization of the cash so available with the appellant for any other purpose. In such circumstances, the appellant could explain the sources of cash found from his possession and therefore, no addition on this ground was warranted. Accordingly, addition of Rs.9,23,800/- made by the AO on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No. 8 of the Department is hereby Dismissed. 33. Ground Nos. 1(a), 1(b), 2(a) 2(b) of the Assessee for A.Y. 2010-11 to A.Y. 2016-17; Ground No. 2(c) for A.Y. 2011-12 A.Y. 2012-13 33.1 Through these grounds of appeal, the assessee has challenged the time limit for passing of the assessment order and as also auditing of books of account u/s. 142(2A) of the IT Act, 1961. 33.2 Before us, the counsel of the assessee did not press the grounds so raised and therefore, Ground Nos. 1(a), 1(b), 2(a) 2(b) of the Assessee for A.Y. 2010-11 to A.Y. 2016-17 and Ground No. 2(c) of the Assessee for A.Y. 2011-12 A.Y. 2012-13 are hereby Dismissed. 34. Ground No. 3 of the Assessee for A.Y. 2010-11 to A.Y. 2016-17 34.1 Through this ground of appeal taken for all the assessment years under consideration, the assessee has challenged the framing of the assessment on the basis of the report submitted by the special auditors without giving any opportunity to the assessee on such report. 34.2 Before us, the counsel of the assessee has not pressed this ground and therefore, the Ground No. 3 for A.Y. 2010-11 to A.Y. 2016-17 is hereby Dismissed. 35. Ground No. 4 of the Assessee for A.Y. 2010-11, A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account. According to the ld. CIT(A) since the AO had detected an altogether different source of income of the assessee, there was absolutely no necessity for the AO to first reject the books of account of the assessee u/s. 145(3) of the Act which was maintained in respect of individual business of liquor carried out by the assessee and in respect of syndicate businesses. Accordingly, the ld. CIT(A) dismissed the Ground so raised. 36.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 36.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 36.6 Per Contra, Learned Counsel for the assessee relied upon the written submissions made before the ld. CIT(A). 37.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. In our considered view, the AO has not disturbed the trading results shown by the assessee in his books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought time to submit his response. Finally, the AO made an addition of Rs.4,25,000/- in the assessee s income on account of undisclosed warehouse profit from M/s. Mahakal Traders. 39.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences. The assessee, in his written submission, has mainly denied of operating any warehouse either in his individual capacity or in association with any other person or syndicate. The ld. CIT(A) noted that the subject loose paper, which was in the form of a computerized ledger account of the assessee in the books of account of some M/s. Mahakal Traders for the financial year 2009-10, was found and seized from the premises of the assessee. The ld. CIT(A) further noted that the assessee could not controvert that the income so credited was not his individual income but the income of some syndicate. Thus, in absence of any satisfactory reply from the assessee, the ld. CIT(A) confirmed the addition made by the AO. The ld. CIT(A) has given the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehouse profit derived by the assessee is not exempted u/s. 86 of the Act. Accordingly, the Ground Nos. 8(a) and 8(b) of the Assessee for A.Y. 2010-11 are hereby Dismissed. 41. Ground Nos. 9(a), 9(b) 9(c) of the Assessee for A.Y. 2010-11 41.1 Through these Grounds of appeal, the assessee has challenged the action of the ld. CIT(A) in upholding the addition of Rs.2,36,000/- made by the AO in A.Y. 2010-11 on account of unexplained payment of commission to achieve turnover in M/s. Calcutta Developers Pvt. Ltd.. 41.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee, some loose papers in the form of a letter given by some Saraogi Associates on behalf of M/s. Calcutta Developers Pvt. Ltd. was found and seized. In the said letter, addressed to the assessee on 27- 04-2009, it has been stated that the assessee had paid a commission of a sum of Rs.2,36,000/- for purchasing turnover on behalf of some company namely M/s. Calcutta Developers Pvt. Ltd.. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances such letter was found in his possession and why such letter was addressed to him. The appellant also could not demonstrate that the commission stated in the said letter was not paid by him but, by someone else. In such circumstances, in my considered view, I do not find any infirmity in the action of the AO in making the addition in the appellant s income. Thus, addition made by the AO amounting to Rs. 2,36,000/- is Confirmed. Therefore, appeal on these grounds is Dismissed. 41.4 Aggrieved with the addition confirmed by the ld. CIT(A), the assessee is in appeal before us. 41.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 41.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand notes before this Bench. 42.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes. While adjudicating the above grounds, it has been held by us that the assessee, in fact, had formed syndicates with others for carrying out the business of liquor and in such syndicates, he had also made some investments, towards his capital contribution, the sources whereof remained unexplained. However, the quantum of such unexplained investment was not determined for the reason that the assessee has taken the aforesaid specific grounds agitating the quantum of the additions. The AO has dealt with the issue of unaccounted capital investment at para (14.10) at page no. 51 of the impugned order. After reproducing the written submission made by the assessee before him, the AO, on the basis of the working of the Special Auditors, furnished the break-up of undisclosed capital investment for various assessment years in respect of which the assessee was issued a show cause notice. As per the break-up, the assessee was required to explain the sources of unexplained investment in capital of syndicates, for all the assessment years involved, at Rs.4,63,05,626/-. In the same para, the AO has also discussed, at length, the written submission made by the assessee before him. The AO has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,00,813/- made by the AO on account of assessee s investment in Ujjain Syndicate during the A.Y. 2016-17. The ld. CIT(A) noted that during the course of the search, a loose paper was found and as per such loose paper, the assessee was found to have made an investment of Rs.31,00,813/- in some Ujjain Syndicate. The ld. CIT(A) further observed that on such loose paper, with the description Ramesh Rai Ji , a capital of Rs.31,00,813/- was clearly shown. According to the ld. CIT(A), during the course of the search and post search investigations, the assessee could not controvert the notings made on such loose paper neither before the AO nor before him. Accordingly, the ld. CIT(A) confirmed the addition of Rs.31,00,813/- made by the AO for A.Y. 2016-17. The ld. CIT(A) has given the relevant findings at para (4.27.1) of his order which are reproduced as under: 4.27.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. During the course of the search a loose paper was found and inventorized and as per such loose paper the appellant was found to have made an investment of Rs.31,00,813/- in some Ujjain Syndicate. On suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious premises of the assessee and his associates, the assessing officer has vide para (14.7) of her Order has, inter alia, drawn the assessment year wise details of capital invested by the assessee in various syndicates. We also find that after determining the assessment year wise investments, the AO has placed reliance upon one table marked as MS-01 prepared by the assessee and scanned by the AO at page no. 50 of her Order. We find that as per such table, except for A.Y. 2015-16, in all other assessment years, the amount of fresh capital infused by the assessee in various syndicates was lower than the sum total of capital withdrawn by the assessee from such syndicates and share of his profit in the respective syndicate and therefore, for other assessment years, the assessing officer has not made any addition on account of capital invested. However, for A.Y. 2015-16, the AO found that in such year, the assessee had not derived any share of profit from any syndicate and made the fresh investment amounting to Rs. 1,80,16,897/- but made the withdrawls from the capitals to the extent of Rs. 1,05,36,443/- only, thus, the AO found that during the year relevant to A.Y. 2015-16, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -17 are herebyAllowed. 46. Ground No. 9 of the Assessee for A.Y. 2016-17 46.1 Through this Ground of appeal, the assessee has challenged the action of the ld. CIT(A) in upholding the addition of Rs.5,00,000/- made by the AO in A.Y. 2016-17 on account of unexplained expenditure in the nature of illegal gratification. 46.2 Briefly stated facts of the issue, as emanating from the assessment order, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee situated at Indore, some loose paper inventorized as BS-2, Page no. 47 was found and seized. The AO, from such loose paper, noted that the assessee had made payment of some illegal gratification of Rs.5,00,000/-. During the course of the assessment proceedings, the AO, vide a show-cause notice, required the assessee to furnish his explanation on the subject issue. In reply, the assessee denied of making any illegal gratification. The AO, by discarding the explanation of the assessee, made an addition of Rs.5,00,000/- on this count. 46.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During ..... X X X X Extracts X X X X X X X X Extracts X X X X
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